The company reached the decision following the completion of sale of 50% stake in the Russia-based joint venture (JV) TNK-BP to Rosneft for $12.48bn cash and 18.5% Rosneft shares.
Post the sale, BP now owns almost 19.75% in Rosneft.
The company is expecting to return its shareholders an amount equal to the company’s initial investment in TNK-BP.
BP chairman Carl-Henric Svanberg said the company’s stake in Rosneft is expected to generate long-term value for it as well for 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," Svanberg added.
BP Group chief executive Bob Dudley said, "BP is moving on to the next phase of its business in Russia, becoming the largest private shareholder in Rosneft, Russia’s leading oil company."
The proposed share buy-back program is expected to exceed the required amount to offset the earnings per share dilution, and a reduction in BP’s asset base, following its major $38bn divestment program over the past three years.
BP intends to keep the additional cash of $4.48bn to reduce BP Group debt as part of its commitment to maintain a strong balance sheet.
