BP warns on Russian sanction effects

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BP, the giant British energy producer that has strong links with Russian state oil company Rosneft, has warned of harmful effects from further Western sanctions.

At the same time that it reported a sharp rise in quarterly profits, BP said that, so far, sanctions have had no significant effect on its business in Russia, but added that could change.

About a third of its crude oil output comes from there and it is by far the largest foreign investor in the country through its nearly 20 percent stake in Rosneft.

BP’s shares fell 2.5 percent on Tuesday despite it posting a 34 percent increase in its profit.

Its warning follows French oil services firm Technip cutting its profit forecast, and carmaker Renault revealing falling sales in an “uncertain” Russian car market.

Renault’s chief performance officer for sales and marketing Jerome Stoll told analysts: “We are in a political and economic climate that is completely uncertain.”

Stoll was downbeat about sales in Russia: “When we say a 10 percent fall for the year, we are perhaps a little optimistic, there is a risk it could be worse than that.”

Renault shares dropped 4.6 percent on Tuesday.

Sanctions are indeed a double edged sword; diplomats in Brussels say the European Commission expects them to cost the EU 40 billion euros this year and 50 billion in 2015.