Kuwait Lifts Stake in BP to 21.25%; Will Stop at 22.5%

Kuwait lifted its stake in British Petroleum Co. above 20%, but it pledged to stop buying the oil multinational’s stock when it reaches a holding of 22.5% and will not seek representation on the board of directors, an official of the Persian Gulf nation’s investment arm said Friday.

The pledge was made by Trevor Ball, chief investment manager at the London-based Kuwait Investment Office. Ball’s remarks were the first direct statements of Kuwait’s immediate intentions toward BP. The KIO places the Gulf state’s petro dollar investments worldwide and has gradually been buying into BP, Britain’s biggest company.

The Kuwaiti agency raised speculation that it was building on its 19.53% stake by announcing early Friday that it held 1.269 billion BP shares, or 21.25%.

Industry analysts disagreed on the Arab country’s motives. Some said they believed Kuwait’s previous assertions that it was simply buying the shares as an investment.

Others suggested it was buying the stake as a first step in an effort to establish closer ties, ultimately giving Kuwait access to BP’s extensive refining and marketing operations in Europe and the United States.

The stake breached the 20% level BP has said is acceptable.

“KIO policy with regard to all its investments is to regard them as investments and not as a means of influencing the policy of the company in question,” Ball said. “This is equally so in the case of BP.”

“The KIO looks on this as a long-term holding in a company for whose management and policy KIO have a high regard and which it is confident will act in the interests of shareholders,” he said. “For that reason KIO doesn’t propose to seek representation on its board.”

The Kuwait office said it will increase its stake to 22.5% as soon as market conditions permit. BP refused to comment on the situation Friday.

Kuwait had hoped for a 25% stake in BP because that would give it the right to block special resolutions put to BP shareholders, one oil analyst said. The resolutions have to receive approval of at least 75% of the stockholders.