UAE oil giant circling BP gas fields
A state-backed oil giant from the United Arab Emirates is positioning itself for a swoop on BP’s energy empire.
Adnoc, the Abu Dhabi-owned group, has been considering a move for BP’s key assets and looking to partner with another bidder to buy some of the FTSE 100 group ’s divisions, Bloomberg reported.
The Middle Eastern company, which is run by Sultan Ahmed Al Jaber, the UAE’s energy minister, is said to be most interested in BP’s liquefied natural gas (LNG) fields, rather than taking over the entire company.
Adnoc recently started an international unit, XRG, which is on the hunt for gas and chemicals deals as it targets a big jump in LNG capacity.
It is understood that XRG’s discussions about a possible bid are at an early stage with no decisions made. No BP assets have been announced as being for sale.
Adnoc has been a longstanding suitor for BP, with The Telegraph last year reporting that Adnoc had explored a full-blown takeover of the UK group, which has long suffered from a depressed stock market valuation .
Deliberations did not advance after Adnoc concluded that BP was not the right fit for its strategy.
The company was also concerned about the politics of any bid. A takeover of BP would almost certainly draw UK government involvement because of its significance to Britain.
Sultan Al Jaber, who has run Anoc since 2016, is also the chairman of UAE media company IMI, which has been involved in funding a bid to buy The Telegraph.
Adnoc’s possible interest comes as BP battles to turn around its fortunes after a string of missteps in recent years. Murray Auchincloss, the chief executive, is trying to reset that with a return to oil and gas, and a plan to sell assets.
Elliott, the US activist investor, also recently took a significant stake in the group and has been pushing for changes to improve performance and shareholder value, including spending cuts and asset sales,
BP and Adnoc already have a long history of working together on projects. The London-headquartered company helped discover oil in Abu Dhabi more than half a century ago.
Last year BP also took a 10pc stake in an LNG plant under construction in the emirate and the companies also struck a deal to form a joint venture focused on production from two vast Egyptian gas fields.
Under the deal, BP transferred interests in three gas fields to the joint venture as well as exploration rights. Adnoc put cash into the joint venture helping BP raise funds to further expand in the Middle East.
The move was part of BP’s attempts to battle a prolonged underperformance stemming in large part from its previous focus on a net zero strategy.
Other oil companies have also been exploring opportunities at BP, whose market value has fallen by a third in just over a year to below £60bn.
Adnoc referred questions to XRG, which declined to comment. A BP spokesman said the group refused to comment on “rumour and speculation”.