Financial News

  • 30 July 2014, 11:42

BP Warns Of Impact Of Sanctions On Russia

Oil giant BP has warned that increased international sanctions imposed on Russia could have an "adverse impact" on the company.

It said tighter economic restrictions enforced by the West over the ongoing Ukraine crisis may harm its relationship and investments in Russia's state-owned oil firm Rosneft.

The comments from BP come as it released its second quarter results, showing a profit of $3.635bn (2.14bn).

Hours after the announcement, the firm's fears appeared to have been realised as European governments agreed further sanctions against Russia, with the country's oil industry among the targets.

BP owns 19.75% of Rosneft, which is Russia's largest oil company, and the source for almost 9% of its annual profits.

BP is a top-tier FTSE 100 firm and a key company for UK pension funds to invest in.

On Monday, Russian foreign minister Sergei Lavrov said his country had no intention of imposing tit-for-tat sanctions.

Mr Lavrov said: "I assure you, we will overcome any difficulties that may arise in certain areas of the economy, and maybe we will become more independent and more confident in our own strength."

His comments came as a panel of judges in The Hague ordered the company to pay $50bn (29.4bn) in damages to shareholders of the now defunct oil firm Yukos.

They said that officials under President Vladimir Putin manipulated the legal system to bankrupt Yukos, which was formerly owned by Mikhail Khodorkovsky.

Yukos, once Russia's largest oil company, was broken up after Mr Khodorkovsky was arrested in 2003.

It was declared bankrupt and auctioned off - with Rosneft buying most of its assets.

Rosneft said that it expected no claims to be made against the company in connection with the Hague court ruling, which Russia contests.

It said it was not a defendant in the case and that the ruling would not have a negative impact on its "commercial activity and assets".

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