BP shares rise on rumour of Middle East investment

SHARES in BP jumped 3.5 per cent yesterday amid reports it may turn to Middle East investors to ward off any takeover approach.

While US Independence Day holidaymakers shunned Gulf of Mexico beaches tarred by the leaking well, weekend reports claimed the embattled oil major was looking for a strategic investor among the sovereign wealth funds of the Middle East and Asia.

An investor would help strengthen the group's defences against opportunistic bids and raise funds for the liabilities racking up behind the worst oil spill in US history.

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Meanwhile, Shokri Ghanem, chairman of Libya's national oil company, said his country's sovereign wealth fund should invest in BP to take advantage of under-presure stock.

Yesterday. BP admitted that it had so far spent just over $3.1 billion (2bn) on the response effort.

BP shares rose 11.3p to 333.3p, but some shareholders balked at the idea of a strategic investor.

One top-ten BP investor who did not want to be named said: "We don't think a strategic partner is at all necessary. We think this is just people trying to panic the company and stampede into doing something to earn huge fees from selling new shares in BP. Shareholders will be saying 'No, thank you' to this and we have communicated this to the company."

Another top-ten stakeholder agreed that the group "probably did not" need a strategic investor at the moment.

One report said BP's advisers were trying to drum up interest among rival oil groups and sovereign wealth funds to take a stake of between 5 and 10 per cent in the company at a cost of up to 6bn. BP declined to comment.

Shares in the oil giant have lost more than half their market value since the explosion and subsequent oil spill struck on 20 April.

Attempts to stop the flow have been unsuccessful, with BP now pinning hopes on relief wells that should be complete sometime next month.

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"Skimmer" vessels have been out in force but the hurricane season in the Gulf has hampered efforts and high seas have been preventing most from operating.

A super tanker adapted to scoop oily water from the surface was still being tested by coastguard officials just north of the well site, said Bob Grantham, spokesman for TMT Shipping Offshore, which operates the vessel.

"Once the effects of Hurricane Alex on wave action have sufficiently passed, we will be able to test skimming operations with an important boom system deployed to draw and direct more oily water in the direction of the vessel intake jaws," Grantham said.

TMT hopes that, once the ship has passed the test, it will secure a skimming contract that could enhance the total capacity of the containment operation to remove oil pollution from the water.

BP has so far collected some 585,400 barrels of oil, but is now unlikely to be able to fully control the leak until the two relief wells are completed.

As well as the ongoing cost of the operation and claims, the firm has set aside a $20bn compensation fund for those affected by the spill. According to one report, BP investors expect the company's leadership to change, possibly once the leak is capped, with both chief executive Tony Hayward and chairman Carl-Henric Svanberg at risk of losing their jobs.

A US federal court last week lifted a six-month drilling ban imposed by the Obama administration.

A new moratorium now being sought through the courts is expected to be more flexible and could be adjusted.