BP unveils buyback

The proposed buy back of $8bn 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 per cent stake in TNK-BP to Russia’s Rosneft for $12.48bn (£8.2bn) in cash and Rosneft shares.

BP now holds 19.75 per cent 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 in cash, shares and assets in the formation of TNK-BP in 2003, BP has received a total of $19bn (£12.5bn) 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 (£25.1bn) divestment programme over the past three years. The remainder of the proceeds from the TNK-BP deal will go towards reducing debt.