BP's new CEO will not join Rosneft's board of directors
Bernard Looney, who took over as CEO in February, will not take any of the BP seats on the board of directors "Rosneft" due to a difficult relationship with the Russian oil giant.
According to an agreement between Looney and outgoing CEO Bob Dudley, Dudley will retain one of the seats, retiring in March.
Guillermo Quintero, a Venezuelan citizen who is also a former head of BP and is affiliated with PDVSA, South America's national oil company, will retain another seat.
Sources told Reuters that “Rosneft” was informed about this arrangement.
BP owns almost a fifth "Rosneft", its largest foreign investment and a third of all its production.
BP CEO discusses the company’s strategic partnership with Rosneft
Looney did not work in Russia. He cannot be compared to the highly experienced 64-year-old Dudley and his deep connections with “Rosneft”, Kremlin and Russian President Vladimir Putin.
«Dudley will remain on the board “Rosneft”, because the relationship between BP and Moscow is very complicated», – BP top manager told Reuters.
Looney's decision not to sit on the board of directors has not been previously reported. In October, Dudley said he would remain on the board of directors. “Rosneft” after retiring in March, but did not explain why it would be.
«With unrivaled experience in the international oil industry and in Russia, Bob will continue to benefit from his valuable experience serving on the Board of Directors “Rosneft”», – according to BP's message to Reuters.
Quintero's ties to Venezuela are also important to "Rosneft", as a Russian company became an important buyer of oil from that country after it was hit by Washington sanctions.
"Rosneft" did not respond to a written request for comment.
According to the annual report “Rosneft” for 2018, Dudley is chairman of the company's strategic planning committee, which focuses on long-term development and sustainability.
Unclear if anyone will receive remuneration from BP for being on the board of directors “Rosneft”. Neither Dudley nor Quintero own any shares according to the 2018 Annual Report. “Rosneft” and did not receive any remuneration from her last year.
He and Quintero regularly participate in board discussions “Rosneft” and vote on key issues ranging from long-term strategy to dividend payments to shareholders including BP.
Looney becomes BP CEO at a time when oil companies are under pressure from investors for the stated goals of the Paris Climate Agreement, oil workers must reduce their carbon emissions.
An agreement with Dudley will keep Looney at arm's length from “Rosneft” and Russia. Source in “Rosneft” said it could be beneficial to Looney as the United States and the European Union have imposed economic sanctions on Russia and “Rosneft” for the return of Crimea to Russia in 2014.
«In terms of sanctions, the fact that BP's new CEO will not be on the board is even good, which allows him to distance himself a little (from “Rosneft”), said a senior source close to “Rosneft”. – Dudley trusts BP, he's an insider. He is friends with (CEO "Rosneft" Igor) Sechin, which is good for "Rosneft" ».
Dudley first started working in Russia in 1994, then he was the CEO of TNK-BP, a joint venture with a group backed by four Russian oligarchs. Ultimately the assets were sold “Rosneft” in 2011, giving BP a 19.75% stake in the oil giant and two board seats.
He played a key role in managing BP's Russian operations after Crimea, and lobbying for Rosneft served BP's interests..
In a February 2019 letter to Reuters, Dudley asked Putin to provide “Rosneft” tax incentives for the development of a large project in Russia.
«Russian companies have limited opportunities to compete with American manufacturers and maintain their share of the global market», – wrote to Dudley.
His efforts were complemented by lobbying by Sechin and the Russian Energy Minister to help “Rosneft” compete with other global oil producers, especially the burgeoning American shale industry.
The tax breaks will also help compensate Russian companies for any losses incurred as a result of Russia's participation in an agreement with OPEC to cut production since 2017, Dudley said in a letter..
Dudley ended the letter with a request for tax breaks for the Priobskoye license block, which produces about 500,000 barrels of oil per day, or about 5% of Russia's total production. No decision has been made yet.
BP is a shale producer, the letter was written about three months after BP completed the $ 10.5 billion purchase of US shale assets from BHP.
BP declined to comment on the letter.