Fines May Prompt BP to Cut Back in Russia, Asia

Fines May Prompt BP to Cut Back in Russia, Asia
Fines May Prompt BP to Cut Back in Russia, Asia

The prospect of up to $18 billion in new fines for the 2010 Gulf of Mexico oil spill could pressure BP to sell assets from the Americas to Asia and Russia, where its interests risk being dragged into a political standoff between Moscow and the West.

Shares in the British oil group plunged on Thursday after a US judge ruled the company was "grossly negligent" for the rig blast and spill that killed 11 workers in the worst offshore environmental disaster in US history.

On Friday, while cautioning that the level of fines may not be determined for years and will be appealed, some analysts said the bad news could prompt BP to look at reducing its exposure.

"I wouldn't be surprised due to the ongoing crisis in Ukraine and Russia if BP would like to reduce its huge 19.75 percent stake in the BP-Rosneft joint venture to cut their risks there, even though it is profit making," Reuters quoted Natixis analyst Abhishek Deshpande as saying.

BP's assets in Russia generate up to a quarter of its global production and the company has said it remains firmly committed to them despite the crisis in Ukraine, where separatists are being supported by Moscow. The West has imposed economic sanctions on Russia and Moscow has countered with its own restrictions.

Deshpande said a reduction of BP's Russian exposure would not be easy and buyers were limited. They could include China, if cleared by the Kremlin, or Rosneft itself, he said, though the state-owned company is struggling because of sanctions.

BP has already divested around $50 billion of assets in recent years, slimming down to focus its growth on the Gulf of Mexico, Russia, Angola and the Caspian Sea.

BP has set aside $42 billion for cleanup, compensation and damages arising from the April 20, 2010 disaster in the Gulf of Mexico, including $3.5 billion for fines under the Clean Water Act.

Thursday's ruling could make BP liable for up to $17.6 billion in fines if an appeal fails, potentially leaving it with a significant shortfall. The maximum fine under a simple "negligence" ruling would have been $4.5 billion.