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Libya eyes stake in ‘bargain BP’

Daily Telegraph

Libya has expressed an interest in building a stake in BP, describing the oil company as a bargain following its Gulf of Mexico oil spill.

By Rowena Mason
Published: 9:03PM BST 05 Jul 2010

The Libyan Government, headed by President Gaddafi, may not be welcomed as an investor in BP by the White House.
The 'A Whale' is the world's biggest skimming vessel and there are  hopes it can significantly increase the amount of oil picked up from  the surface.

The ‘A Whale’ is the world’s biggest skimming vessel and there are hopes it can significantly increase the amount of oil picked up from the surface.

Share in BP rose 3.5pc to 333.3p in London, following weekend speculation that the company had been in contact with sovereign wealth funds about them buying stakes.

Shokri Ghanem, the chairman of Libya’s National Oil Corporation, told a newswire that: “BP is interesting now with the price lower by half and I still have trust in BP. I will recommend it to the Libyan Investment Authority.”

He later added: “I think that BP shares are good value for bargain hunters,”

BP denied that it was planning to issue any new equity, but a weighty shareholder buying up stock on the open market could still help provide a floor on the company’s plummeting share price. It declined to comment on any talks with sovereign wealth funds.

The oil giant has lost half of its market value since the Deepwater Horizon rig exploded and sank on April 20, triggering a catastrophic leak. Qatar, Abu Dhabi and the Kuwait Investment Authority, which already holds 1.8pc of BP, have also been linked to the company as possible investors.

One City analyst with a buy rating on BP said any formal deal with Libya would “most likely alienate the US even further” and potentially annoy big shareholders if the deal was done as a placing that dilutes the stock.

The US lifted trade sanctions against Libya in 2004, but still has a fractious attitude over the country’s links to the Lockerbie bombing that killed 270 people on a US Pan Am jet.

It would come at a time when BP is trying to rebuild its relationship with Capitol Hill, since the oil spill eroded trust in the company’s safety record.

US President Barack Obama personally criticised Tony Hayward, the chief executive, over tactless comments and suggested he should be fired.

BP already has a good relationship with Libya and plans to start exploratory drilling there later this year, investing $1bn over seven years.

In other oil spill developments:

• BP said that the cost of trying to stop the leak and clean up the oil had topped $3bn, suggesting that the bill is currently running at $7m a day.

• The company chartered a Navy airship to help it spot new areas of slick, control skimming operations and report on the locations of stranded animals. It will be able to stay in the air longer than helicopters or planes.

• BP said there was a “possibility” that the first relief well aimed at plugging the leak could be completed by the end of July, suggesting it is ahead of its August target.

• Bad weather delayed tests on whether a giant super-tanker called the ‘Whale’ will be successful at scooping up 500,000 barrels per day from Gulf of Mexico waters. “After an initial 48-hour testing period results remain inconclusive in light of the rough sea state we are encountering,” a BP spokesman said.

•Six-foot waves caused by storms could also delay BP’s efforts to increase the amount of oil being captured from the leak. The energy giant already put off the new operations last week due to the effects of Hurricane Alex.

The US National Weather Service said high waves could last until Thursday.

•Sources said that BP is considering selling some of its non-core assets in Colombia, Venezuela and Vietnam. This could be in addition to the possible sale of its $9bn stake in PanAmerica, for which the China National Oil Corporation may bid.


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