DUBAI—Libya should buy a strategic stake in BP PLC to take advantage of its weak share price following the giant oil spill in the Gulf of Mexico, the country’s top oil official told Zawya Dow Jones.
Shokri Ghanem, chairman of Libya’s Nation Oil Co. said he will recommend buying a stake in BP to the Libyan Investment Authority, or LIA, the North African state’s sovereign wealth fund.
“BP is interesting now with the price lower by half and I still have trust in BP, I will recommend it to the LIA,” Mr. Ghanem said in a telephone interview Monday. “It’s a good opportunity for bargain hunters,” he added.
Mr. Ghanem’s remarks follow local press speculation that oil-rich Middle East investors are considering a strategic investment in BP as it continues to battle the oil spill in the Gulf of Mexico. The spill, now in its 76th day, ranks among the largest in U.S. history and has hurt the region’s fishing and tourism industries.
“We are not selling any assets right now but we do wish to sell $10 billion of noncore upstream assets over the next 12 months; if people want to buy BP shares we always welcome new shareholders,” said John Pack, a London-based spokesperson for BP.
BP’s shares last traded up 3.5% at 333 pence ($5.06). Shares have dropped from as much as 640 pence before the April 20 blast aboard Transocean Ltd.’s (RIG) Deepwater Horizon drilling rig—leased by BP for its Macondo well.
“Gulf sovereign wealth funds and other investors from the region might express interest given the record of investing in companies in distress which have brought confidence and placed a ‘floor’ under the companies’ share price and prevented further depreciation,” said John Sfakinakis, chief economist at Riyadh-based Banque Saudi Fransi-Credit Agricole.
Mohammed Layas, Executive Director of the Libyan Investment Authority, said Monday he had “no comment at this stage.”
The LIA in 2008 acquired a stake of less th an 2% in Italy’s Eni SpA, which has extensive operations in Libya, after buying shares on the open market. The state fund was also targeting other energy investments including in international oil companies, Mr. Ghanem said in June 2009.
“A stake in BP could bring privileged access to sophisticated production know-how,” said Eckart Woertz, director of economic studies at the Dubai-based Gulf Research Center.
Libya has stepped up overseas investments since economic sanctions were lifted on the country in 2004. It has also attracted significant investments from oil firms including Eni, Total S.A. and Occidental Petroleum in recent years.
BP and its Libyan partner, the Libya Investment Corp., or LIC, in May 2007 signed an exploration and production deal with NOC worth at least $900 million for the onshore Ghadames and offshore Sirt areas, covering an exploration area of around 54,000 square kilometers.
BP said earlier Monday the cost of the response to the Gulf of Mexico oil spill so far is $3.12 billion, as it ramps up oil-containment efforts following storm surges caused by Hurricane Alex. The cost figure includes containment, relief-well drilling, grants to Gulf states, claims paid and federal costs, BP said in a statement.