EXCLUSIVE: Emirati ADNOC considered acquiring BP-sources

by Sarah McFarlane, Anousha Sakoui and Ron Bousso

(Reuters) – Abu Dhabi National Oil Company (ADNOC) recently considered acquiring Britain’s BP but the deal has not progressed beyond preliminary discussions, sources close to the matter told Reuters.

ADNOC ultimately decided that acquiring BP would not be a good strategic move, according to three people familiar with the matter. Political considerations also weighed in the balance, according to one of them.

The company, which is worth $110.3 billion, has performed less well than its competitors in recent years, making the Briton a prime target for potential buyers.

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Investors have penalized the strategy adopted by BP to reduce its fossil production and accelerate its energy transition more quickly than its rivals Shell, Exxon or Chevron. In February 203, the Briton returned to his most aggressive energy transition projects.

The Abu Dhabi National Oil Company has instead increased its oil and gas production capacity and its CEO, Sultan Al Jaber, seeks to make his company a global giant in the oil sector. Not listed on the stock exchange, ADNOC is important enough to consider acquiring BP.

The two companies have spoken directly in recent months and ADNOC has spoken with investment banks to finalize an agreement, according to two sources familiar with the matter.

The Emirati giant considered all options including acquiring a large part of BP, according to a fourth source.

“It didn’t go very far,” however, one of these sources told Reuters.

ADNOC was also interested in other companies with a view to having a broader catalog in terms of liquefied natural gas (LNG).

Both ADNOC and BP declined to comment.

ADNOC told Reuters last October that it was on the lookout for investment opportunities in the renewable energy, gas, petrochemicals and LNG sectors, which it sees as high-growth markets.

ADNOC has carried out several operations targeting European companies. Last year, the UAE company made an €11.3 billion takeover bid to acquire German plastics and chemicals maker Covestro.

Partners for more than 50 years, BP and ADNOC announced a joint venture project in February to develop gas assets in Egypt. Last year, they also made a $2 billion bid to acquire a 50% stake in Israeli gas producer NewMed, although the deal was suspended due to conflict in the region.

(Reporting by Sarah McFarlane, Anousha Sakoui and Ron Bousso in London; additional reporting by Yousef Saba and Alistair Smout; French version Zhifan Liu)