BP Loses Swagger, To Sell US Stakes
In the first week of July, BP Chief Tony Hayward made a whirlwind tour of the Middle East to meet Prince Mohammad Bin Zayed Al Nahyan of the United Arab Emirates and other sheiks who manage sovereign funds to seek investment for the beleaguered oil giant. The Arabs had been taken for a ride before the 2008 market crash by Wall Street bankers, who sold them several duds, and were circumspect about the proposals from BP. That seemed to make it certain that the suddenly cash-strapped oil giant would find it difficult to hold together the original entity of BP and still pay for oil spill damage by adequately funding its escrow account.
Three things had suddenly changed for BP after its initial boast during the Gulf oil spill about handling compensations as well as paying dividends. The US official in charge of disbursements from the $20 billion escrow account set up by BP, Ken Fineberg, was a veteran of the Sept. 11, 2001 terrorist attacks disbursements and had set up a blistering pace within a fortnight of assuming charge, disbursing over $200 million each week. Besides, he was exhorting claimants to take compensation claims from the piggy bank and think of suing BP additionally if not satisfied, which meant that the claims would increase in the coming months.
BP’s longtime partner at the Macondo oil exploration project, APC Anadarko, which had 25% stake, had refused to pay for the spill and turned down BP’s request for a funding of $272 million as its share. Company CEO Jim Hackett said BP's actions amounted to gross negligence and it was reckless handling of the well that resulted in the disaster. He added that minority partners cannot be held responsible and be asked to bear compensation costs for the oil spill. Earlier MOEX offshore owned by Mitsui, which has 10% of stake in the Macondo reserve, had turned down BP’s request for a quick reimbursement of $111 million, its share of costs, on grounds that the they were conducting an independent investigation on the risk and responsibility.
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