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British energy company BP’s decision to exit operations in Russia is expected to hit the company’s share price and "jeopardise" gains achieved on the back of soaring energy prices, according to analysts.
BP on Sunday said it is abandoning its 19.75 per cent stake in the Russian oil giant Rosneft following Moscow’s decision to attack Ukraine.
The company’s chief executive Bernard Looney, as well as its former chief executive Bob Dudley, also resigned from the board of Rosneft “with immediate effect”. The decision is expected to cost BP as much as $25 billion, according to the company.
“It’s a huge deal as the two companies [have] worked closely together since 30 years and Rosneft stands for about half of BP's oil and gas reserves and a third of its production,” said Ipek Ozkardeskaya, senior analyst at Swissquote.
“The latest news will probably be a decent blow to BP’s share price and jeopardise the latest gains due to the soaring energy prices.”
London-listed BP swung to its highest profit in eight years last year on the back of higher energy prices. It reported a net profit of $12.8bn in 2021, compared to a loss of $5.7bn in 2020 as oil and gas prices surged due to a rise in demand and tight supply. BP’s share price was down 7.12 per cent at 5:15pm UAE time on Monday.
“The BP news also raises questions on how the other oil giants will react to the Ukrainian calamity. Will other oil companies like TotalEnergies or Shell dare make similar moves?” Ms Ozkardeskaya said.
France's TotalEnergies holds a 19.4 per cent interest in Novatek as well as other oil and gas projects in the country, according to its website.
The decision by BP to exit operations in Russia comes as the US and its allies in Europe moved to block some Russian banks from the Swift international payments system for its actions in Ukraine.
The countries also announced a slew of punitive measures to limit Russia’s ability to do business in dollars, euros, pounds and yen.
“Stricter rules around access to the international financial system could hurt international oil companies’ ability to receive dividends and other payments,” global consultancy Wood Mackenzie said. “Targeted sanctions against their Russian partners seem unlikely, but would present a much more profound challenge.”
Norway’s oil company Equinor also said on Monday that it will be withdrawing from its joint ventures in Russia. The company has been in Russia for over 30 years and entered a co-operation agreement with Rosneft in 2012.
“In the current situation, we regard our position as untenable,” its chief executive and president Anders Opedal said in a statement posted on Equinor's website. “We will now stop new investments into our Russian business, and we will start the process of exiting our joint ventures in a manner that is consistent with our values.”
At the end of 2021, Equinor had $1.2bn in non-current assets in Russia and the decision to exit operations is expected to affect the book value of its assets in the country and lead to impairments, the company said.
Russia is one of the world's top producers of oil and gas. In 2020, it produced about 10.2 million barrels a day of crude oil and natural gas condensate, placing it second after the US, with Saudi Arabia in third place, according to the 2021 BP Statistical Review of World Energy. Russia is also the second-largest producer of natural gas in the world.
“If the economic sanctions against Russia stick in the coming months, western companies may increasingly find it difficult to do business in the country and end up retreating in subsequent waves,” Vandana Hari, founder and chief executive of Vanda Insights in Singapore told The National.
More European and American companies could also come under government or shareholder pressure to “leave Russia or pare down their businesses in the country” following BP’s move, she said.
“This will hurt the Russian oil and gas sector hard — both in terms of its ability to bring back production in line with Opec+ easing its cuts and developing projects to develop new reserves.”
Local or Chinese companies could step in to fill the gap but it would be difficult to replace big oil companies because of their superior technology and financial strength, Ms Hari said.
Trevor Sikorski, head of natural gas and energy transition at London-based Energy Aspects, said BP is already under pressure to spend more of its capex on energy transition, and the latest decision will “hasten that move”.
“The major implication is for Russia’s energy sector, that will find it very difficult for the coming years to access western finance and technology — mostly important for any highly complex projects,” he said.
Children who witnessed blood bath want to help others
Aged just 11, Khulood Al Najjar’s daughter, Nora, bravely attempted to fight off Philip Spence. Her finger was injured when she put her hand in between the claw hammer and her mother’s head.
As a vital witness, she was forced to relive the ordeal by police who needed to identify the attacker and ensure he was found guilty.
Now aged 16, Nora has decided she wants to dedicate her career to helping other victims of crime.
“It was very horrible for her. She saw her mum, dying, just next to her eyes. But now she just wants to go forward,” said Khulood, speaking about how her eldest daughter was dealing with the trauma of the incident five years ago. “She is saying, 'mama, I want to be a lawyer, I want to help people achieve justice'.”
Khulood’s youngest daughter, Fatima, was seven at the time of the attack and attempted to help paramedics responding to the incident.
“Now she wants to be a maxillofacial doctor,” Khulood said. “She said to me ‘it is because a maxillofacial doctor returned your face, mama’. Now she wants to help people see themselves in the mirror again.”
Khulood’s son, Saeed, was nine in 2014 and slept through the attack. While he did not witness the trauma, this made it more difficult for him to understand what had happened. He has ambitions to become an engineer.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
More on Quran memorisation:
BRIEF SCORES
England 353 and 313-8 dec
(B Stokes 112, A Cook 88; M Morkel 3-70, K Rabada 3-85)
(J Bairstow 63, T Westley 59, J Root 50; K Maharaj 3-50)
South Africa 175 and 252
(T Bavuma 52; T Roland-Jones 5-57, J Anderson 3-25)
(D Elgar 136; M Ali 4-45, T Roland-Jones 3-72)
Result: England won by 239 runs
England lead four-match series 2-1
Name: Peter Dicce
Title: Assistant dean of students and director of athletics
Favourite sport: soccer
Favourite team: Bayern Munich
Favourite player: Franz Beckenbauer
Favourite activity in Abu Dhabi: scuba diving in the Northern Emirates
%20Ramez%20Gab%20Min%20El%20Akher
%3Cp%3E%3Cstrong%3ECreator%3A%3C%2Fstrong%3E%20Ramez%20Galal%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%3C%2Fstrong%3E%20Ramez%20Galal%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStreaming%20on%3A%20%3C%2Fstrong%3EMBC%20Shahid%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%20%3C%2Fstrong%3E2.5%2F5%3C%2Fp%3E%0A
Call of Duty: Black Ops 6
Developer: Treyarch, Raven Software
Publisher: Activision
Console: PlayStation 4 & 5, Windows, Xbox One & Series X/S
Rating: 3.5/5
BUNDESLIGA FIXTURES
Saturday, May 16 (kick-offs UAE time)
Borussia Dortmund v Schalke (4.30pm)
RB Leipzig v Freiburg (4.30pm)
Hoffenheim v Hertha Berlin (4.30pm)
Fortuna Dusseldorf v Paderborn (4.30pm)
Augsburg v Wolfsburg (4.30pm)
Eintracht Frankfurt v Borussia Monchengladbach (7.30pm)
Sunday, May 17
Cologne v Mainz (4.30pm),
Union Berlin v Bayern Munich (7pm)
Monday, May 18
Werder Bremen v Bayer Leverkusen (9.30pm)
Closing the loophole on sugary drinks
As The National reported last year, non-fizzy sugared drinks were not covered when the original tax was introduced in 2017. Sports drinks sold in supermarkets were found to contain, on average, 20 grams of sugar per 500ml bottle.
The non-fizzy drink AriZona Iced Tea contains 65 grams of sugar – about 16 teaspoons – per 680ml can. The average can costs about Dh6, which would rise to Dh9.
Drinks such as Starbucks Bottled Mocha Frappuccino contain 31g of sugar in 270ml, while Nescafe Mocha in a can contains 15.6g of sugar in a 240ml can.
Flavoured water, long-life fruit juice concentrates, pre-packaged sweetened coffee drinks fall under the ‘sweetened drink’ category
Not taxed:
Freshly squeezed fruit juices, ground coffee beans, tea leaves and pre-prepared flavoured milkshakes do not come under the ‘sweetened drink’ band.
UAE currency: the story behind the money in your pockets
