BP boss in MidEast talks, more progress on relief well

  • World
  • Thursday, 08 Jul 2010

ABU DHABI/HOUSTON (Reuters) - BP boss Tony Hayward met officials from an Abu Dhabi state investment fund on Wednesday, the latest stop on a global quest for money to ward off takeovers and help pay the huge costs of the worst oil spill in U.S. history.

Hayward, BP's chief executive, was also 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 oil company.

A United Arab Emirates official said Hayward's visit with the officials from Abu Dhabi Investment Authority was a routine one scheduled to mainly discuss the British firm's concessions with Abu Dhabi National Oil Company.

"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.

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.

Hayward was in Azerbaijan on Tuesday.

BP's shares on the New York Stock Exchange were up more than 2 percent on Wednesday, buoyed for a second day 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 on Wednesday it was 15 feet (4.6 metres) from the side of the leaking well, though 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 presents a tough test for his leadership.

On Thursday, the White House will go head-to-head with the oil industry in court over its effort to suspend deepwater oil drilling in the Gulf for six months in the wake of the BP blowout.

The administration says the moratorium is necessary to ensure deepwater drilling is done safely. The industry calls it an unnecessary infringement on its business that costs jobs.

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

For full spill coverage http://link.reuters.com/hed87k

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

Oil service stocks have taken a severe beating since the spill. The Philadelphia oil services sector index is down about 25 percent from its 2010 high hit in late April.

The European Union's energy chief said in Brussels that the bloc should consider its own moratorium on new deepwater drilling for oil until a probe into the BP spill is completed.

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.

Storms and rain in the Gulf region have also displaced protective booms aimed at keeping the oil from the coastline and spread the oily muck into new places.

Rough seas have cut back significantly on efforts to skim oil from the Gulf and, with the region settling into the six-month hurricane season, forecasters were watching a weather system over the southern Gulf they said could develop into a tropical depression and hit the coast near the Texas-Mexico border on Thursday.

"The weather's made it difficult for the clean up operations to go full force. The strike force teams have been working as frequently but the weather has been hampering the whole clean-up effort," said Kurt Fromherz, spokesman for Plaquemines Parish in Louisiana.

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 will depend on how much crude eventually pours from the well, which blew when a rig exploded on April 20, killing 11 workers.

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 (IPIC), was not interested in buying a BP stake, a company source said. IPIC invests in global oil and gas assets.

A spokesman for ADIA declined to comment.

(Additional reporting by Kristen Hayes in Houston, Matthew Bigg in Myrtle Grove, La., Rodrigo Campos in New York, Tom Brown in Miami, Pete Harrison in Brussels, Sarah Young in London, Stanley Carvalho in Abu Dhabi and Shaheen Pasha in Dubai; writing by Patricia Zengerle; editing by Kristin Roberts and Jerry Norton)

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