BP in Abu Dhabi talks

7th Jul 2010 09:20

BP chief executive Tony Hayward has met with Abu Dhabi crown prince Mohammed bin Zayed Al Nahyan and he is reported as saying that he would be comfortable with Abu Dhabi taking a stake of up to 10% in the oil giant. BP needs to find a way to finance its liabilities following the Deepwater Horizon oil disaster. The shares have more than halved since the Gulf of Mexico well exploded on 20 April killing 11 workers, and they traded below 300p a share two weeks ago for the first time in 14 years.BP is still saying that it does not intend to issue any new shares at this moment in time but it is not just Abu Dhabi that is interested in investing. A fundraising does not have to be through a share issue, it could be via an issue of bonds. The governments of Kuwait, China and Singapore are thought to be interested in injecting funds under a £6bn plan designed to shore up the oil group's finances. Libya is also said to be interested in taking a stake, while reports at the weekend suggested the company may also talk to investors in Russia.Even if BP does raise extra money it will still need to sell some of its assets in order to finance its liabilities in the Gulf of Mexico. As well as the Kuwaiti interest in some Middle East fields, Gazprom is said to be looking at assets in the former Soviet Union, while last week there was talk that Argentine operation Pan-American could be on the block. BP is likely to have to give the US government prior warning about any asset sales or a takeover as US politicians fear the oil giant may try and avoid covering all its liabilities in the Gulf of Mexico.It has emerged that the US Department of Justice sent a letter to BP on 23 June demanding it be notified of any deal at least 30 days in advance.The letter mentioned "any planned or contemplated events that may involve substantial transfers of cash or other corporate assets outside of the ordinary course of business". President Obama also wants to hear about "corporate restructuring, reorganisation, acquisitions, mergers, joint ventures, sales, divestments or disbursements". BP has been bending over backwards to please the Obama Administration, agreeing last month to a $20bn escrow fund to cover compensation claims. It's already paid out over $3bn in clean-up costs.