Rouble ructions raise fears over BP's Rosneft dividend as oil prices continue to tumble
Fears were mounting that BP’s dividend from its investment in Russia’s biggest oil company is under threat as the rouble crisis continued yesterday.
BP owns a fifth of Rosneft, Russia’s state-owned oil and gas group, and received a huge $700million (£446million) dividend earlier this year from the investment.
But a debt crisis at Rosneft, the plummeting oil price, and the tumbling rouble could end the windfall, analysts warned yesterday.
Crisis: Fears were mounting that BP’s dividend from its investment in Russia’s biggest oil company is under threat as the rouble crisis continued yesterday
Rosneft was yesterday part-blamed for the rouble crisis and is under pressure to repay part of a massive $12.7billion (£8.1billion) loan that is due on Monday.
It borrowed $40billion (£25.5billion) from a group of banks last year to fund its purchase of former rival TNK-BP.
But the crash in oil price – with Brent crude standing at around $60 a barrel – and the impact of sanctions, has left the group struggling to refinance or repay the huge debt.
It last week issued rouble-denominated bonds to the tune of $11billion (£7billion) which in turn exacerbated the risks in Russia’s banking system.
Bankers now expect the oil giant to repay a $7.6billion (4.85billion) portion of a short-term loan this week and Rosneft played down its links to the currency crisis.
'Provocation': Igor Sechin, Rosneft chief executive said ‘none of the plans for drawing rouble loans envisages conversion into hard currency’
Chief executive Igor Sechin, pictured, said: ‘As for the rumours about Rosneft’s involvement in the currency market collapse – these rumours are a provocation and in reality the company is participating positively in the currency system stabilisation.
‘None of the plans for drawing rouble loans envisages conversion into hard currency.’
Rosneft also argued that it ‘demonstrates steady financial results regardless of high volatility in the global economy’ and is ‘capable of paying off its taken loans unassisted’.
BP made $1.6billion (£950million) from Rosneft in the first half of this year – up 80 per cent on the previous year. Rosneft accounts for third of production but only around 2-3pc of cash flow at the oil major.
The next dividend payment is due next July. Shares in BP rose 13.6p or 3.5pc to 397.55p.
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