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After the BP Spill

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Libya Positioned to Buy Major Stake in BP

July 19th 2010

Arab Topics - Muammar Qaddafi
Muammar al-Gaddafi

Just as the news for British Petroleum was getting brighter, with stocks soaring 6 percent higher after the temporary cap fell into place and sealed the leak into the Gulf of Mexico, news sources reported on a possible deal between the oil giant and the Libyan government that could end up in Libya’s owning a considerable stake in the oil company.

However, the story became even stickier for BP as the week ended. While its prices were at their disaster mode low, wealthy Libyan oil moguls were vying for a controlling stake in BP. Shokri Ghanem, chairman of Libya’s Nation Oil Co., with which BP is now doing business with, told Dow Jones Newswires that he will recommend investing in BP to the country’s sovereign wealth fund. Ghanem said in an interview, “BP is interesting now with the price lower by half and I still have trust in BP, I will recommend it to the [Libyan Investment Authority] … It’s a good opportunity for bargain hunters.” BP shares jumped 5 percent on the news out of Libya.

In addition, news on the street is that BP is now seeking increased Middle East investment as it guards against takeovers. European newspapers have reported that BP and the Kuwaiti Investment Authority are discussing increasing the Kuwaits’ existing 1.77 percent share in the company. BP CEO Tony Hayward recently flew to Abu Dhabi to meet Crown Prince Sheikh Mohammed bin Zayed Al Nahyan. Sheikh Mohammed is also the chairman of Mubadala Development, a strategic investment company owned by the Abu Dhabi government.

By way of background, Abdelbaset Ali Al Megrahi was jailed in the U.K. after being convicted in 2001 for planning and implementing the destruction of Pam Am flight 103 over Lockerbie, Scotland on December 21, 1988, killing all 259 people aboard, mostly Americans, plus 11 civilians on the ground, hit by the falling debris. In 2009, when doctors reported that he was terminally ill with prostate cancer with no more than nine weeks left to live, the U.K. released him on humanitarian grounds, allowing him to live his final days at home.

A few weeks ago, Al Megrahi’s doctors reported to the world that he was now living strong, with a possible 10 years or more to live before his terminal cancer consumes him. That news riveted so many people who had fought for justice for the victims for so long, and the news was even harder to accept learning that BP, the company responsible for the largest environmental disaster the United States has seen, may have lobbied for his release to win Libya’s favor.

Last week, British Ambassador Nigel Sheinwald wrote a letter to several U.S. Senators saying that he had disagreed with the decision to release Al Megrahi, and later said it was a mistake.

Media reports have already described BP’s pressure on Tony Blair’s government in 2007 to free Al Megrahi in order to facilitate then-ongoing negotiations concerning a large oil contract with Libya raised eyebrows. BP, with its Libyan partner, the Libya Investment Corp. did sign a deal with Libya’s national oil company worth at least $900 million in 2007. The partnership includes onshore and offshore drilling of approximately 34,000 square miles of Libyan territory. The oil company has acknowledged that it discussed with the British government concerns over “slow progress” of a prisoner transfer agreement between the UK and Libya. “No matter how powerful the corporation or how important a foreign government, a blood-money deal is a blood-money deal,” Schumer (D-NY) said. He asked for the Justice Department to pursue the case. United States Secretary of State Hillary Clinton promised that she will also investigate the claims that BP had accepted “blood money” from the Libyans to press for Al Megrahi’s release.

According to the Los Angeles Times, the U.S. Justice Department has already asked BP for at least 30 days’ notice of “any significant corporate actions.” In addition, the Committee on Foreign Investment has a formal process for reviewing deals involving foreign control of a U.S. business. The embattled oil company, which has substantial business in the U.S., may have violated the Foreign Corrupt Practices Act by lobbying the British government to release Al Megrahi.

Juda Engelmayer is an executive with the NY PR agency, 5W Public Relations and a contributor to the Cutting Edge News.


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