Middle Eastern investors have reportedly considered becoming strategic investors with troubled BP, and BP shares have themselves been on rebound lately, fuelled by this news and the progress of its relief wells.Still, what’s most peculiar about Middle Eastern interest is that BP’s most prized assets aren’t its conventional energy assets, but rather its natural gas and renewable energy assets:
On the surface, investing in a major oil firm is unlikely to help these funds diversify their oil-generated capital. However, it could actually give them the expertise and technology needed to diversify their oil-dependent economy.
“SWFs over the last two years have been actively investing into technology transfer from an economic diversification point of view.. From this perspective, BP actually have an attractive portfolio,” said Victoria Barbary, senior analyst at financial advisory group Monitor.
“Gas is greener, cheaper. Gas prices are far less volatile than oil prices. As gas is going to become very popular in the next 10 years, having an expertise in gas exploration is attractive because it will maintain flows of money into sovereign wealth funds.”
Remember BP’s push to look like a clean, environmentally-progressive company? The gulf spill has made much of that look like absolute hogwash, but under the hood BP appears to have actually amassed some green tech credentials. There’s a difference between public relations and branding vs. actual know-how. The first is completely shot while the second still exists.
This is by no means argument for pardoning BP, it’s an investment argument in regards to the fact that BP shares may have more underlying value than markets are giving it credit for, coming from angles we least expect.