BP plc (ADR) (BP) Might Cut Off Russian Investments After $18 Billion in Penalties

After a federal judge ruling going against the company, BP plc (ADR) (NYSE:BP) might consider reducing its exposure in Russia. The disinvestment is quite possible considering the current political stress between Moscow and other western countries.

Earlier, a U.S. district judge in New Orleans, Carl Barbier, found BP plc (ADR) (NYSE:BP) guilty in the 2010 Deepwater Horizon oil spill and explosion. According to the judge, all the involved companies including BP plc (ADR) (NYSE:BP), Transocean LTD (NYSE:RIG) and Halliburton Company (NYSE:HAL) were found equally negligent in the matter. Barbier found BP plc (ADR) (NYSE:BP) to be 67% responsible for the explosion and opened a possibility for civil penalties worth $18 billion.

BP plc (ADR) (BP)

The share of BP plc (ADR) (NYSE:BP) witnessed a decline of up to 4% in its prices. Some analysts are of the opinion that it might take years to determine the charges and the company could afford paying them without selling any major asset. On the contrary, some analysts are of the opinion that the company might cut its exposure in Russia considering the restrictions imposed by both Western countries and the Russian government over each other.

According to a Natixis analyst, Abhishek Deshpande, “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.” However, he further added that it might be difficult to find buyers for the sell-off. BP plc (ADR) (NYSE:BP) has $42 billion set apart for cleaning up the issues evolving from the incident including $3.5 billion for fines imposed under the Clean Water Act.

This article has been written by Prakash Pandey.

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