British oil company BP yesterday announced an $8 billion share buyback programme, acting swiftly on its promise to reward investors after it sold its stake in its Russian unit TNK-BP.

BP, which completed the sale of the half-owned TNK-BP to Russian state oil firm Rosneft on Thursday, said the move, designed to increase the value of remaining shares, was an amount equivalent to the value of the company’s original investment in TNK-BP in 2003.

The British company had already flagged that it planned to distribute to shareholders some of the $12.48 billion it netted from the Russian sale, first announced last October.

“It’s good news that they’re returning that amount of cash, probably $2 billion to $2.5 billion more than what was anticipated,” Santander analyst Jason Kenney said.

The $8 billion figure is about twice the minimum analysts had calculated BP would pay when it promised last October to at least offset any dilution to earnings per share, as a result of the TNK-BP sale.

BP confirmed that it expected the size of the proposed buyback would exceed the effect of the dilution. The return also reflects the huge reduction to BP‘s asset base from the $38 billion worth of disposals carried out to help pay for the cost of the Gulf of Mexico oil spill in 2010, it said.

“This buyback programme should allow our shareholders to see benefits in the near-term from the value we have realised by reshaping our Russian business,” BP‘s chairman Carl-Henric Svanberg said in a statement.

The deal with Rosneft, worth $55 billion in total and making it the biggest in Russia‘s corporate history, also gives BP a near 20 per cent stake in Rosneft.

The $4.48 billion balance remaining from the Russian sale after the buyback will be used to reduce group debt, BP said.

BP is currently in court in New Orleans over the Gulf of Mexico oil spill, which happened when the Deepwater Horizon rig exploded and sank, killing 11 men.

The disaster, the worst in the US‘s offshore history, prompted BP to cut its dividend in 2010, before resuming payments in 2011.

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