Crown Prince issues first confirmation of interest since meeting the oil company's chief executive in the capital last week.
Abu Dhabi weighs buying BP stake
Abu Dhabi is considering an investment in BP, the international oil company grappling with a catastrophic oil spill in the Gulf of Mexico. "We are still thinking about it," Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, told Bloomberg yesterday. "We are looking across the board. We have been partners with BP for years."
The comments mark the first official confirmation that Abu Dhabi is considering such an investment since Tony Hayward, the chief executive of BP, visited the emirate last week for meetings with leaders including Sheikh Mohammed, and officials of the Abu Dhabi National Oil Company (ADNOC) and Abu Dhabi Investment Authority. He described his meeting with the Crown Prince as "very good". A BP spokesman said yesterday the company would welcome any investor. He declined to comment specifically on Abu Dhabi or Sheikh Mohammed's comments.
BP shares surged as much as 5.2 per cent to trade as high as 414 pence after Sheikh Mohammed's comments. The company's stock has climbed 26 per cent since the start of this month, a welcome turnaround after the huge share price declines that followed the blowout of the Deepwater Horizon rig in the Gulf of Mexico. BP shares closed up 2.8 per cent at 410 pence yesterday in London. BP is a partner with ADNOC and other international firms in concessions to produce oil and gas from some of Abu Dhabi's biggest fields.
The contracts, dating back to 1939, are due to expire within the next few years. The international partners have recently been holding regular meetings with Abu Dhabi officials over renewal terms. If Abu Dhabi were to retain BP as a concession partner, it would want to ensure the company's long-term financial stability. That has been placed in doubt by the US spill, with some analysts suggesting that liabilities and clean-up costs could bankrupt BP or make it vulnerable to a hostile takeover.
The company estimates it has so far spent US$3 billion (Dh11.01bn) cleaning up the spill, which has tarred beaches from Florida to Texas, contaminated environmentally sensitive wetlands and shellfish beds, and damaged local businesses including fisheries and tourism. Many US oil workers were left idle after Barrack Obama, the US president, placed a moratorium on new offshore drilling after the April 20 blowout.
The moratorium is the subject of a US court battle, which is likely to be the first of many related to the oil spill. BP's stock lost about half its value after the accident, in which an explosion sank the Deepwater Horizon oil platform with the loss of 11 lives. Crude has been spewing from the ruptured well head ever since at rates the US coastguard has estimated reached between 35,000 and 60,000 barrels per day.
But earlier this month the shares began a tentative recovery, coinciding with media reports that Middle East and Asian sovereign wealth funds might invest in BP. At the same time, Mr Hayward was holding a series of meetings with some of BP's most important international partners, which took him to Russia, Azerbaijan, Abu Dhabi and Angola. He had previously handed over control of BP's day-to-day oil spill operations to Bob Dudley, an American.
On Monday, BP installed a new cap on the well that may be able to stop the flow of oil until the company can finish drilling a relief well to plug the leak permanently. It began a series of integrity tests yesterday to ensure the cap was working. BP said it did not expect any more oil to be released into the ocean, but warned the sealing cap system had never been used at the depth of its damaged Macondo well, which lies beneath 1.5km of water.
"There is much greater confidence in stemming the flow of oil," Peter Hutton, an analyst at NCB Stockbrokers in London, told Bloomberg. "The new cap tides them over until the well is killed." Analysts also responded positively to rumours that BP might be preparing to sell its Alaska assets to the US oil firm Apache. They said the assets needed infrastructure spending and were in a region where BP's diminished political status would be a disadvantage.