Libya hints at taking stake in BP

Discussion in 'Wall St. News' started by crgarcia, Jul 7, 2010.

  1. Libya hints at taking stake in BP

    By Andrew England in Abu Dhabi and Simeon Kerr in Dubai

    Published: July 5 2010 12:49 | Last updated: July 5 2010 13:41

    Libya’s top oil official on Monday said that his country’s sovereign wealth fund should invest in BP to take advantage of the troubled company’s falling share price.

    Shokri Ghanem, chairman of Libya’s national oil company, made the comments amid speculation that BP was seeking to raise capital from the oil-rich Middle East.

    “BP is interesting now with the price lower by half and I still have trust in BP, I will recommend it to the LIA [the Libyan Investment Authority],” Mr Ghanem told Dow Jones.

    Shares in BP, which have lost almost half their value since a catastrophic explosion and oil spill in the Gulf of Mexico in late April, were 5.3 per cent higher at 339p in afternoon trading in London. The group said on Monday that the cost to date of the response to the spill had risen above $3bn for the first time.

    Mr Ghanem’s comments came after an official in the Gulf told the Financial Times that BP had already been reaching out to investment entities in the region, particularly those with which it already had relations.

    The official said the company was looking for access to capital to make it less vulnerable to competitors and potential takeover bids.

    The message, the official said, was: “Our stock is cheap, why not buy some?”

    A senior international banker in the Gulf said there had been signs of interest in BP from investors in the region, but added “there is a big difference between interest and writing a cheque.”

    “They might be willing to invest if BP is desperate, but there is a long way to go yet. BP has not mandated advisers to market fundraising yet,” the banker added.

    The Arab Gulf is home to some of the world’s biggest sovereign wealth funds, which have previously stepped in to inject capital into western banks, including Citigroup and Barclays.

    BP has a particularly long history with the United Arab Emirates, which is home to several government-controlled funds that invest in energy related assets. They include the International Petroleum Investment Company, which was used as the vehicle for Sheikh Mansour bin Zayed al-Nahyan, a member of Abu Dhabi’s ruling family, to invest $3.5bn in Barclays, and Mubadala, a state investment company. Abu Dhabi, the UAE’s capital, is also home to the one of the world’s largest sovereign wealth funds, the Abu Dhabi Investment Authority, which invested $7.5bn in Citigroup in November 2007.

    BP is also active in Libya. It won a contract to explore for gas and oil in the north African state in 2007. The LIA is seeking to build up its portfolio.

    The Qatar Investment Authority has been one of the more active state investment vehicles in recent months, with a series of high-profile investments in UK property, including the acquisition of Harrods, the London department store.

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  2. where are all the BP to zero "Easy trade" cheerleaders?
  3. When foreign investors get "excited" about foreign assets, run the other way! Let the "Race to Zero" begin. :eek: :D
  4. Agree, history teaches us that foreigners are bagholders.