BP unveils £5.3bn buyback plan

BP set aside £5.3bn (€6.2bn) for shareholders today as part of an immediate return from the reshaping of the oil giant’s Russian business.

The proposed buy back of $8bn (€6.18bn) worth of shares is the equivalent of BP’s 2003 investment in TNK-BP joint venture, which it unwound yesterday.

Under a transaction struck in October, BP sold its 50% stake in TNK-BP to Russia’s Rosneft for $12.48bn (€9.65bn) in cash and Rosneft shares.

BP now holds 19.75% of Rosneft, which has become the world’s biggest publicly traded oil company with daily crude output of more than three million barrels.

Chairman Carl-Henric Svanberg said: “We expect our stake in Rosneft will generate long-term value for BP and its shareholders.

“But this buy-back programme should also allow our shareholders to see benefits in the near-term from the value we have realised by reshaping our Russian business.”

Since the investment of $8bn (€6.18bn) in cash, shares and assets in the formation of TNK-BP in 2003, BP has received a total of $19bn (€14.7bn) in dividends from the joint venture.

BP said that the size of the proposed buy-back is expected to exceed that required to offset earnings per share dilution from the TNK-BP sale.

It also reflects the reduction in BP’s asset base following its major $38bn (€29.4bn) divestment programme over the past three years.

The remainder of the proceeds from the TNK-BP deal will go towards reducing debt.