Sunday, 4 July 2010
BP is holding talks with the Kuwait Investment Office about taking a much larger stake of the oil company in an effort to ward off a takeover by a foreign rival, as well as raising additional funds.
The Middle East sovereign wealth fund is a significant shareholder, with a 1.75% stake, but BP would like it to increase its share, perhaps to as much as 10%.
The move would raise valuable cash, about £6bn, that BP needs to cope with the mounting liabilities from the oil spill in the Gulf of Mexico which some estimate could eventually reach $70bn (£58bn).
Middle East shares fell, with Egypt’s gauge dropping to the lowest since November, on concern weak manufacturing data from the U.S. to China will slow the global recovery. Oil lost 8.5 percent last week, pushing Gulf stocks lower.
Egypt’s EGX 30 Index lost for an eighth day, decreasing 2.3 percent to 5,895.55, helped by Pioneers Holding after the brokerage and Beltone Financial abandoned a plan to combine. The Kuwait SE Price Index slid 1.7 percent to 6,320.6, the lowest since November 2004. Agility fell 5.2 percent on investor concern over a U.S. criminal case against the Middle East’s largest storage and logistics company.
“Investors are moving away from risk appetite in line with what’s happening with global markets” and as oil declines, said Haissam Arabi, chief executive officer of Gulfmena Alternative Investments in Dubai. “We expect more downside pressure.”
King Abdullah of Saudi Arabia, holder of the world’s largest crude-oil reserves, encouraged using the fuel wisely to protect the interests of future generations, rather than a ban on exploration, an analyst said.
The monarch told Saudi scholars studying in Washington that he had ordered all oil exploration to cease “in order to keep the earth’s wealth for our sons and grandsons,” state-owned Saudi News Agency reported yesterday.
“The King’s statement shouldn’t be perceived as a message that Saudi Arabia is stopping its capacity expansion projects but rather that Saudi Arabia has to be mindful of the future needs of the country and be cognizant of its usage wisely and prudently to support future generations,” said John Sfakianakis, chief economist at Riyadh-based Banque Saudi Fransi.
Financial institutions in the Middle East are understood to be considering a strategic investment in BP, the oil giant racked by problems caused by the oil spill in the Gulf of Mexico.
Informed sources said proposals from the region had already been made to BP advisers in London, and a response was awaited.
“BP knows there is potential support from the Middle East,” said one informed source. Middle East investors would also consider buying key assets from BP, he said.
Agility may post a profit of about 29.2 million dinars ($100.5 million), or 29 fils a share, for the first half, Al-Qabas reported, citing people familiar with the matter.
Agility’s second-quarter earnings per share reached 12 fils, the newspaper said. Al-Qabas said the results are preliminary.
The Middle East’s largest storage and logistics company reported a profit 75 million dinars in the first half of last year, according to Bloomberg data.
The shake-up of the senior management structure of Dubai World, the conglomerate restructuring US$23.5 billion (Dh86.31bn) of debt, continued with the handing over of responsibility for the developer Limitless to its sister company Nakheel.
It has also appointed a new board at Economic Zones World (EZW), its free zones operator.
The reorganisation follows a similar rejig at Nakheel and does not affect the terms of the financial restructuring package being put together by Dubai World. Limitless remains excluded from the financial restructuring.
A week after Aabar Investments announced plans to delist its shares from the Abu Dhabi Securities Exchange (ADX), the fate of minority shareholders remains unclear.
At issue is whether the investment firm, which is 71 per cent-owned by the Abu Dhabi Government-controlled International Petroleum Investment Company, will be required to buy back the other shares, valued at close to Dh5 billion (US$1.36bn), or whether those shares will continue to trade over the counter.
In a statement released to the ADX last Monday, the company hinted at the latter option.