British Government Ready to Oppose Bid for Struggling BP

While BP was reporting a year-on-year 20% decline in profit during the first quarter of the current year, the UK government delivered a stinging remark, making clear that potential suitors of the British company would find its opposition. 

In a clear proof of the strategic importance of the oil and gas industry, several articles reported on Tuesday that the British government warned that it would oppose any bid for the company. This comes in a moment the spotlights are on the nexus of politics and the gas industry, in light of recent revelations suggesting that Shell managed to lobby European authorities on the new renewables agreement reached in October 2014.

The British government does not have a stake in the company since Tatcher’s political era, and rumours in the industry indicate that Chevron and ExxonMobil would be willing to capitalise on BP’s weaknesses - related to its exposure to Russia and the US spill liabilities. 

On Tuesday, BP reported its intention to divest a further $10 billion in assets by the end of the year, as the recent agreement to sell its interest in the CATS system clearly indicates. Underlying replacement cost profit for the quarter was $2.6 billion compared with $3.2 billion for the same period in 2014, and $2.2 billion for the fourth quarter of 2014. 

“We are resetting and rebalancing BP to meet the challenges of a possible period of sustained lower prices. Our results today reflect both this weaker environment and the actions we are taking in response,” Bob Dudley, BP group chief executive, said in a note.  

Over the last years, the neoliberal philosophy seemed to gradually fade away, as London is growing protective of strategic assets based in its borders, tipping the balance in favour of a UKIP-led rhetoric, sounding the death knell to Tatcher’s doctrine.