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Wed 7 Jul 2010 11:10 AM

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BP CEO meets UAE's ADIA - source

Tony Hayward presented 'options' to ADIA in meeting on Wednesday - official source.

BP CEO meets UAE's ADIA - source
STOCK WATCH: BP has said it can cover the costs of the spill without having to sell new shares. (Getty Images)

BP's boss met officials from an Abu Dhabi state fund on Wednesday as hopes for fresh investment and progress towards closing a leaking U.S. oil well lifted the company's battered shares.

A United Arab Emirates official said Chief Executive Tony Hayward had met officials from Abu Dhabi Investment Authority (ADIA) during a routine visit.

He spoke as speculation mounted of a stake purchase by a Middle East or Asian sovereign wealth fund to help BP ward off takeovers and pay the rising costs of the worst oil spill in U.S. history.

The UAE official, speaking on condition of anonymity, said Hayward's visit was a scheduled one mainly for discussion of BP's concessions with Abu Dhabi National Oil Company (ADNOC).

"With the CEO in Abu Dhabi speaking to the sovereign wealth fund to get some investment it's not surprising that there is some enthusiasm in the market for BP shares," said Mic Mills, head of electronic trading at London-based ETX Capital.

BP has said it has no plans to issue new equity to anyone, but bankers say it is on a marketing drive for its stock - which has fallen by half since the Gulf of Mexico well blew out on April 20.

"This is not part of him travelling the world with a begging bowl asking for equity contributions," a BP spokesman told the UAE's National newspaper. "We are not preparing an equity offering but we're keen that people appreciate the value in BP."

The well being drilled to halt the spill is a week ahead of schedule, the U.S. official overseeing the response to the disaster said on Tuesday.

Retired Coast Guard Admiral Thad Allen told reporters in Houston on Tuesday that crews were still aiming to finish drilling two relief wells in mid-August, and he shot down speculation that the first of the two wells could plug the leak in July.

BP shares, already on the rise in recent days, rose a further 9 percent in New York trade and reached their highest since June 21 in London on Wednesday, standing 3.8 percent higher at 358.8 pence at 0949 GMT.

"Anything that would speed up the process or any kind of success at all as far as capping it would be a welcome relief. Then you can get down to a definitive range of liability," said Alan Lancz, president at Alan B. Lancz & Associates Inc in Toledo, Ohio.

A third vessel at the leak site that will nearly double BP's oil-capture capacity to 53,000 barrels a day from around 25,000 is now partially hooked up, although rough seas are hampering efforts to finish the job.

Estimates of the leak's severity vary widely and run as high as a 100,000 barrels per day.

BP is already committed to a $20 billion fund for clean-up and other costs stemming from the largest offshore oil spill in U.S. history. Its costs to date have topped $3 billion.

The ultimate costs may well depend on how much crude is determined to have leaked from the well that blew when a rig exploded on April 20, killing 11 workers. Investors are keenly eyeing containment efforts.

Analysts said that barring other negative news, the stock may have found a floor with its New York closing price of $26.97 on June 25. Shares are up 16 percent since the close on that day, closing at $31.91 in New York on Tuesday.

"All the negative news on the stock has had its impact," said Kurt Wulff, president at McDep LLC, an oil and gas research firm in Needham, Massachusetts.

"We're optimistic that the news can get better from there. The talk about sovereign buyers may not lead to anything, but it certainly means that value-orientated investors are seeing opportunity."

The spill is wreaking havoc on coastal ecosystems, fishing communities and a tourist industry seen as especially important during a time of high unemployment. It has also thrust itself to the top of President Barack Obama's crowded domestic agenda and presented a tough test for his leadership.

A source in the UAE said on Tuesday that BP executives held talks with sovereign wealth funds in Abu Dhabi, Kuwait and Qatar, as well as one in Singapore, to find a partner who might help it avoid being taken over.

Several sovereign funds already hold BP stakes. Norway and Kuwait control about 1.8 percent each, China has 1.1 percent and Singapore 0.7 percent, according to Thomson Reuters data.

Hayward's meeting in Abu Dhabi concerns an oil concession that dates back to 1939 and is due to expire in 2014.

BP is a minority stakeholder in Abu Dhabi Company for Onshore Oil Operations (ADCO). Informal talks on renewal have taken place between Abu Dhabi authorities and companies involved for years. ADCO is responsible for onshore oil production in Abu Dhabi, the emirate that holds most of the United Arab Emirates' oil reserves.

State run oil giant Abu Dhabi National Oil Company (ADNOC) holds a majority 60 percent stake in the concession. BP holds 9.5 percent, as do Royal Dutch Shell, Total and Exxon Mobil.

Tests showed tar balls washed up on the Texas coast were from the spill, meaning every U.S. Gulf state - Louisiana, Mississippi, Alabama, Florida and now Texas - has been soiled by the largest offshore oil spill in the country's history.

There was a chance disturbed weather over the southern Gulf of Mexico could strengthen into a tropical storm this week, the U.S. National Hurricane Center said.

Although it was not expected to travel over the site of the blown-out BP well, it could come closer than Hurricane Alex, which interrupted the cleanup operations last week. (Reuters)

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