BP's Tryst With Mubarak

Todd Shriber
 
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Oh boy, BP's public relations mishaps just keep on piling up. For investors and traders that actively follow the second-largest European oil company along with keeping abreast of current events, you might have had a hunch that this Egypt mess was not going to blow over without touching BP in someway.

BP investors have not had to endure quite the headaches that Apache (APA) shareholders have had to deal with since political tensions escalated in Egypt, but BP has been exposed for having a cordial relationship with embattled Egyptian President Hosni Mubarak. Mubarak has been president since 1981 and to call Egyptian elections free, open or transparent would, simply put, be wrong.

Various international democracy organizations observed flagrant rigging of the 2005 Egyptian elections. Election Day cheating is one thing. The fate that befell Ayman Nour, Mubarak's opponent in 2005, is something else altogether. Nour was convicted of forgery following the election and sentenced to five years of hard labor. Seems like ''dictator'' would be an accurate way of describing Mubarak.

Unfortunately, these are the kind of unsavory characters BP (BP) has a penchant for cozying up to in an effort to boost reserves and profits. The company has been operating in Egypt for 40 years, so it's safe to assume it knows the lay of the land, whose palms to grease to get things done, etc. And despite the near-term calamity that the North African nation is currently dealing with BP (and others) see opportunity in Egypt.

Egypt is like many of its Arab neighbors in that is faced with the potentially explosive combination of high unemployment and a young population along with an economy that whose best hope may lie in the energy business. At average daily production of just 662,000 barrels, no one is going to confuse Egypt with Saudi Arabia. At the same time, no one is going to confuse BP with a company that cares about controversy. The past year has taught us that much.

After all, someone has to produce those 662,000 barrels In Egypt, BP hopes to more than double its oil and gas production to over 320,000 barrels a day ? almost a tenth of its global output, according to London's Guardian newspaper. To achieve that goal, BP has ''worked hand in glove with dictatorship,'' social justice group Platform said in reference to BP's ties to Mubarak.

On its own, BP's friendliness toward Mubarak is just one more thing the company can be dinged for in the court of public opinion. The bigger issue is BP already has a well-documented penchant for dealing with dictators to get oil deals done. A recent issue of Vanity Fair details BP's dealings with Libyan dictator Moammar Gadhafi for the release of Lockerbie bomber Abdel Baset al-Megrahi for oil deals. al-Mergrahi served eight years of a 20-year term, released because of failing health. Today, he's alive and well, living the high life in Libya.

It is doubtful the higher-ups at BP ever wonder why the company's public image is viewed with such jaundice. If they did, they would not have to look for the answers.

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