Recent reports have revealed that the United Arab Emirates’ state-owned oil company, Abu Dhabi National Oil Company (ADNOC), contemplated the acquisition of Britain’s BP, but ultimately opted not to pursue the potential takeover. Sources familiar with the matter disclosed that while preliminary discussions took place, ADNOC concluded that BP did not align with its strategic objectives, with political considerations also influencing the decision.
BP, valued at 88 billion pounds ($110.3 billion), has been perceived as an underperformer compared to its industry counterparts, rendering it a potential target for takeover. The company’s emphasis on reducing fossil fuel production and expedited transition to renewables, in contrast to peers such as Shell, Exxon, and Chevron, has been met with skepticism from investors and analysts. In February 2023, BP scaled back its ambitious energy transition plans.
In contrast, ADNOC has been focused on augmenting its oil and gas production capacity, with CEO Sultan al-Jaber aiming to reshape the state giant to emulate a global oil major. While ADNOC, not publicly traded, possesses the capability to consider acquiring a smaller oil major like BP, the company engaged in direct discussions with BP and sought counsel from investment banks regarding a potential deal.
The Emirati company explored various options in its assessment of BP, including the prospect of acquiring a significant stake. However, the considerations did not progress significantly, and BP was just one of several companies that ADNOC evaluated for potential acquisition.
ADNOC also expressed interest in other international companies to bolster its access to a broader gas and liquefied natural gas (LNG) portfolio. Both ADNOC and BP declined to comment on the matter, while BP’s UK shares experienced a surge of up to 2.5% in early trading on Friday, reaching their highest level since October, outperforming the broader FTSE 100 and competitor Shell.