BP boss in MidEast, more progress on relief well

  • World
  • Thursday, 08 Jul 2010

The action on Thursday was set to move back to the courts with the oil drilling industry going head-to-head with the Obama administration over the White House effort to suspend deepwater oil drilling in the Gulf of Mexico for six months in the wake of the catastrophic well blowout.

Hayward, BP's chief executive, was seen by Reuters with a senior official from another Abu Dhabi fund, and a report said Saudi investors were looking to buy 10 percent to 15 percent of the British oil company.

A United Arab Emirates official said Hayward's visit with the Abu Dhabi Investment Authority (ADIA) was a routine one. An ADIA spokesman declined comment.

"We are here to talk to our existing shareholders," a cheerful-looking Hayward told Reuters in the ornate, marble lobby of an Abu Dhabi office building before heading into a meeting, along with his six-man entourage.

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But bankers say BP is on a marketing drive for its stock, whose price has fallen by half since its well blew out in April, spewing crude oil into the Gulf of Mexico and soiling the shores of every U.S. Gulf Coast state.

BP executives have held talks with sovereign wealth funds in Abu Dhabi, Kuwait, Qatar and Singapore, seeking a partner that might help it avoid being taken over, a UAE source said.

Abu Dhabi's International Petroleum Investment Company, was not interested in buying a BP stake, a company source said.

BP's shares on the New York Stock Exchange closed up almost 4 percent, buoyed by investor relief the company had said it does not plan to issue new equity, and speculation the worst is behind for what they see as an underpriced energy giant.

"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.


Progress on the relief well, seen as the best hope for finally stopping the 79-day-old disaster, also lifted investor hearts. The U.S. official overseeing the spill cleanup said it was 15 feet (4.6 metres) from the side of the leaking well, although still not expected to be finished before mid-August.

The spill is wreaking havoc on coastal ecosystems, killing birds, sea turtles and dolphins and risking multibillion-dollar fishing and tourist industries at a time of high unemployment.

As a result, it sits atop U.S. President Barack Obama's crowded domestic agenda and has sternly tested his leadership.

On Thursday, the next big round will play out in court in the fight between the drilling industry and the White House over its efforts to suspend offshore drilling.

Given the business and environmental stakes, the U.S. Court of Appeals for the Fifth Circuit in New Orleans is expected to rule quickly, after a rare one-hour oral argument, on whether deepwater drilling should be temporarily halted again.

A federal judge, also in New Orleans, lifted the moratorium last month after Hornbeck Offshore Services Inc. argued it was arbitrary because it was a blanket ban on all new drilling in depths below 500 feet (152.5 meters).

The Obama administration appealed the decision, defending the suspension as needed to provide time to probe the BP oil spill's cause and ensure other drilling rigs operate safely.

It is seeking a stay of the judge's ruling at the hearing, slated for 3 p.m. local time (2000 GMT) on Thursday.

The U.S. Energy Information Administration said the ban will reduce crude output an average of 82,000 barrels per day, more than previously estimated.

A successful court challenge "could give some of these (drillers') stocks a lift in the near term," said Channing Smith, co-portfolio manager of Tulsa, Oklahoma-based Capital Advisors Growth Fund.

The European Union's energy chief said the bloc should consider its own moratorium on new deepwater oil drilling until after a probe into the BP spill.

Estimates of the leak's severity vary widely, to as high as 100,000 barrels per day. A new collection vessel that should more than double BP's oil-capture capacity to 53,000 barrels a day from around 25,000 is projected to take three more days to hook up, as rough seas hamper efforts to finish the job.

With the region settling into the six-month hurricane season, forecasters were watching a weather system over the southern Gulf that could develop into a tropical depression and hit the coast near the Texas-Mexico border on Thursday.

Pushed by the Obama administration, BP has committed to a $20 billion fund for clean-up and other costs stemming from the spill. Its costs to date have topped $3 billion.

The final bill may depend on how much crude pours from the well, which blew when a rig exploded on April 20.

The Wall Street Journal reported on Wednesday that BP plans to push back against a request from the U.S. government for advance notice of any asset sales or other large transactions in the wake of the spill.

Asset sales could be used to help cover spill costs.

The report, in the paper's online edition, cited a person with knowledge of BP's thinking as saying the company would examine how to address concerns "without having to give advance notice of market-sensitive information and transactions."

The U.S. Justice Department had requested that all the companies involved in the Gulf of Mexico oil spill, including BP, advise the department about its plans for transactions such as asset sales, divestments or other major financial dealings.

A BP spokesman would only confirm that the company had received the request and that it had not yet responded.

(Additional reporting by Jeremy Pelofsky in Washington, Martinne Geller in New York, Kristen Hays in Houston, Rodrigo Campos in New York, Pete Harrison in Brussels, Yereth Rosen in Anchorage, Stanley Carvalho in Abu Dhabi and Shaheen Pasha in Dubai; writing by Ed Stoddard and Patricia Zengerle; editing by Paul Simao)

(For more news on Reuters India, click http://in.reuters.com)

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