PetroChina Buying BP Has `Persuasive Economics,' Standard Chartered Says

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Photographer: Nelson Ching/Bloomberg

A PetroChina gas station in Beijing.

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Photographer: Nelson Ching/Bloomberg

A PetroChina gas station in Beijing. Close

A PetroChina gas station in Beijing.

Photographer: Simon Dawson/Bloomberg

The BP headquarters in St James's Square, London. Close

The BP headquarters in St James's Square, London.

Photographer: Derick E. Hingle/Bloomberg

BP contract workers remove oil washed onto the beach at Grand Isle State Park in Louisiana. Close

BP contract workers remove oil washed onto the beach at Grand Isle State Park in Louisiana.

Photographer: Derick E. Hingle/Bloomberg

BP contract workers are reflected in a pool of oil as they use a vacuum hose to clean the beach at Grand Isle State Park in Louisiana. Close

BP contract workers are reflected in a pool of oil as they use a vacuum hose to clean the beach at Grand Isle State Park in Louisiana.

PetroChina Co., vying with Exxon Mobil Corp. as the world’s biggest company by value, would have “persuasive” reasons to seek a takeover of BP Plc, according to Standard Chartered Bank.

BP has fallen 40 percent in London trading since an explosion on a rig in the Gulf of Mexico triggered the worst oil spill in U.S. history. The slide has wiped out $74 billion of value, spurring speculation BP could be a takeover target. State-controlled PetroChina is the nation’s biggest oil producer.

“We expect a full dose of skepticism on this as a real- world proposition, although we argue for the persuasive economics,” analysts at the London-based bank said in a report today. A combined PetroChina-BP would have oil and gas reserves 73 percent larger than Exxon’s and 187 percent more than those of Royal Dutch Shell Plc, they wrote.

Political opposition in the U.S. and U.K. would make a takeover by PetroChina virtually impossible, according to energy analyst Wang Aochao. China’s Cnooc Ltd. abandoned an $18.5 billion bid for California’s Unocal Corp. in 2005 because of opposition from U.S. lawmakers.

“It’s all well in theory, but I can’t see this ever happening,” said Wang, head of China energy research at UOB-Kay Hian Ltd. in Shanghai. “Chinese oil majors prefer to buy smaller oil companies or stakes in ventures abroad and that’s what they’re doing.”

$40 Billion

BP’s long-term shareholders may be more willing to sell because of the uncertainties caused by the oil spill in the Gulf of Mexico, analysts Han Pin Hsi, Jeremy Gray and Kelly Chia said in the report. The company’s liability could be as high as $40 billion, and while China would support such a deal, U.S. regulators could raise antitrust concerns, they wrote.

Mao Zefeng, a Hong Kong-based spokesman for PetroChina, didn’t respond to calls made to his mobile phone. Michael Zhao, a Beijing-based BP spokesman, wasn’t available for comment.

PetroChina has dropped 10 percent in Hong Kong trading this year, compared with the 11 percent decline in the benchmark Hang Seng Index. The stock was at $8.37 at 11:11 a.m. local time.

To contact the reporter on this story: John Duce in Hong Kong at Jduce1@bloomberg.net

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