Business

BP shares rise on Middle East investment rumours

Shares in BP have risen amid speculation that Middle East investors may buy stakes in the oil giant.

The shares closed up 3% at 333.3p following media reports suggesting that BP is seeking investment from Middle Eastern sovereign wealth funds.

BP refused to comment directly on the speculation, but said it "welcomed new investors".

The oil company has been seen as a possible takeover target following the recent collapse in its share price.

Its shares have more than halved in value following the Gulf of Mexico oil disaster, which began in April.

In its latest update, BP said the oil spill had now cost it $3.12bn (£2bn), though the total cost is forecast by analysts to be in the tens of billions.

On Sunday the Guardian website reported that BP was in talks with the Kuwaiti Investment Authority over increasing its 1.75% stake in the company.

Meanwhile the National - the United Arab Emirates newspaper owned by the Abu Dhabi government, cited "informed sources" saying that "BP knows there is potential support from the Middle East".

Asset sales

Analysts also suggest that state-backed oil companies such as China's PetroChina or Kuwait Petroleum could be interested in investing.

Image caption The Gulf of Mexico oil spill has also proved a disaster for BP's share price

A spokeswoman for BP refused to comment directly on the speculation.

"We welcome new shareholders and existing shareholders increasing their holding, but there are no current plans to issue new equity," she said.

Increasing the stakes of current shareholders should help protect BP from possible hostile takeovers from rival oil companies by ensuring that large blocks of shares are tied up and the share price bolstered.

Last week investment bank JP Morgan Chase suggested Exxon Mobil - another global oil giant - as a possible buyer for BP.

James Bevan, chief investment office at CCLA Investments, a BP shareholder, said a deal with Kuwait Petroleum as more likely than a deal with Kuwait's sovereign wealth fund.

"There we might see BP trying to sell positions in Yemen or Egypt - either participation in oil fields there or the oil fields themselves," he said.

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