BP, Rosneft: Are these oil stocks a buy amid Russia-Ukraine tensions?

Highlights

• Countries across the globe are levying sanctions on Russia amid its clash with Ukraine.
• Around 20% of Russian oil company Rosneft is owned by BP, therefore, making it prone to fluctuations due to the Ukraine tensions.
• In addition to the 19.75% stake BP has in Rosneft, both the energy firms are also collaborating in joint ventures.

As the Ukraine tensions are escalating, countries around the world are levying sanctions on Russia to prevent it from invading Ukraine. The rising geopolitical tensions have led to the crashing of stock markets along with a significant rise in oil prices. This has impacted energy companies globally, and the oil and gas supermajor BP (LON: BP.) has been hit hard particularly due to its stakes in the Russian oil company Rosneft (LON: ROSN).

BP’s Rosneft interests

London-headquartered oil and gas supermajor BP is bound to get impacted by the Russia-Ukraine conflict as it is significantly exposed to the third-largest Russian petroleum firm Rosneft. Around 20% of Rosneft, which has a secondary listing on the London Stock Exchange, is owned by BP. Rosneft has contributed approximately US$555 million and US$2.42 billion to BP’s Q4 and entire 2021 profits, respectively.

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Rosneft paid dividends of worth around US$464 million to BP in Q4 2021. Around half of the Russian oil company’s H1 net profit was paid to its shareholders at about 18.03 roubles per share. Rosneft and BP have been strategically cooperating for about 20 years and since 2018, Rosneft has supplied oil and petroleum products worth 30 million tonnes to BP. Focusing on carbon management together, both companies have plans to jointly develop infrastructure in Russia for refuelling vehicles with natural gas and reducing their carbon emissions.

In addition to the 19.75% stake BP has in Rosneft, both the energy firms are also collaborating in joint ventures in eastern Siberia’s 100,000 barrels per day operation and one of western Siberia’s key gas exploration and development projects, with 20% and 49% stakes, respectively.

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BP’s share price performance

UK-based oil and gas giant BP plc is listed on the main market of the London Stock exchange since March 1954. The market cap of the FTSE100 constituent stands at £75,500.13 million as of 22 February 2022. BP has delivered strong results even during the pandemic phase, and it has provided its shareholders with a return of 38.06% over the last one year, as of 22 February 2022.

BP plc’s shares were trading at GBX 388.55, up by 0.53%, around 8.15 AM, on 23 February 2022.

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Rosneft’s share price performance

Leading Russia-based oil refiner and crude exporter Rosneft is listed on the main market of the London Stock Exchange since July 2006. The market cap of the company stands at £42,375.56 million as of 22 February 2022. Its value has depreciated lately, and it has given a return of -20.76% in the last one year.

Rosneft Oil Company’s shares were trading at US$5.68, up by 4.56%, around 8.15 AM, on 23 February 2022.

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Note: The above content constitutes a very preliminary observation or view based on industry trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.