Libya Looking to Bail Out BP?

Looks like we were on to something when we noted the connections between Libya and BP. Seems to Libyans are looking to invest heavily in the trouble British oil giant.

Share in BP rose 3.5pc to 333.3p in London, following weekend speculation that the company had been in contact with sovereign wealth funds about them buying stakes.

Shokri Ghanem, the chairman of Libya's National Oil Corporation, told a newswire that: "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."

He later added: "I think that BP shares are good value for bargain hunters,"

BP denied that it was planning to issue any new equity, but a weighty shareholder buying up stock on the open market could still help provide a floor on the company's plummeting share price. It declined to comment on any talks with sovereign wealth funds.

The oil giant has lost half of its market value since the Deepwater Horizon rig exploded and sank on April 20, triggering a catastrophic leak. Qatar, Abu Dhabi and the Kuwait Investment Authority, which already holds 1.8pc of BP, have also been linked to the company as possible investors.

One City analyst with a buy rating on BP said any formal deal with Libya would "most likely alienate the US even further" and potentially annoy big shareholders if the deal was done as a placing that dilutes the stock.

The US lifted trade sanctions against Libya in 2004, but still has a fractious attitude over the country's links to the Lockerbie bombing that killed 270 people on a US Pan Am jet.

It would come at a time when BP is trying to rebuild its relationship with Capitol Hill, since the oil spill eroded trust in the company's safety record.

More here.