Thursday, July 1, 2010

Will BP (NYSE:BP) Continue Operating in America?

A lot of conjecture has been thrown around about the future of BP (NYSE:BP), especially recently on whether or not it'll be taken over by one of the larger rivals, specifically Exxon Mobil (NYSE:XOM) or possibly Royal Dutch Shell (NYSE:RDS-A).

But as the idea is continually bantered about, a different possible scenario is emerging, and this is one of BP selling off its American division in light of the lost good will in the country.

The cost and distraction related to building up its reputation and moving into new markets in the nation like shale oil and gas, could be more time, cost and effort than it is worth for BP.

It would also probably deal with the payout and bankruptcy concerns, as it would fetch a steep price; probably easily more than they would have to pay out, although that remains to be seen and proven.

BP has had reputation problems in the U.S. since the oil refinery explosion in Texas City, and that, along with other problems will make it difficult, if not impossible to do business in the U.S. in the future, as the scrutiny would be extraordinary, and ongoing reminders of the Gulf spill would constantly be thrown at them.

The problem for BP is they've been looking at the U.S. shale gas market particularly as one of their main engines of growth. But without the goodwill of the American people, along with the temptation of U.S. politicians to garner political points by resisting the energy giant, it'll be hard for them to secure and/or work the areas profitably.

This scenario will probably be the narrative for BP going forward, and it depends upon whether or not they believe they can successfully navigate the problems they face in the U.S. over the long term, as to whether they try to keep doing business there.

1 comment:

Anonymous said...

Very few BP foreigners still work in the US and it is almost impossible to get a job as an expat. Just check out their career website…It will show you that they hire from within each country. If BP pulled out of the USA we would not only lose BP American jobs but thousands and thousands of subcontractor jobs coming from the USA job force. We would also lose the BP Fabric America community fund. Check it out on their website. Thousands of dollars lost to local communities