Qatar Said to Leave Group Bidding for Occidental’s Mideast Stake

Qatar’s national oil company has dropped out of a group of state-backed investors seeking to buy a stake in Occidental Petroleum Corp.’s Middle East business amid a political dispute in the region, people with knowledge of the matter said.

Still interested in a joint-bid for the stake are Abu Dhabi’s Mubadala Development Co. and Oman Oil, said the people, who asked not to be identified because the matter is not public. Qatar Petroleum is weighing buying some or all of the stake on its own, and is seeking a financial adviser to help it do so, the people said.

Occidental is considering breaking up the assets and selling them to individual countries, Chief Executive Officer Stephen Chazen said last week. The split also creates the possibility of a contest for the 40 percent stake, which is expected to fetch as much as $8 billion, one of the people said. Shares of Occidental rose 1.2 percent to $96.02 yesterday.

“The notion that they were going to somehow cooperate with each other in an oil investment is difficult at best right now,” Chazen said at the Howard Weil Energy Conference in New Orleans last week. “At their suggestions, we’ll probably make separate deals with the three countries with somewhat different assets in each one. In some ways, that’s a lot simpler.”

The political rift is over Qatar’s support for the Muslim Brotherhood, which runs counter to a regional crackdown on the Islamist organization after it gained power in Egypt with the 2012 election of President Mohamed Mursi.

Breakup Plan

Calls to Qatar Petroleum, Mubadala and Oman Oil weren’t answered outside of office hours yesterday. Melissa Schoeb, a spokeswoman for Occidental, declined to comment.

Saudi Arabia, Bahrain, and the U.A.E. recalled envoys from Qatar in March after accusing the state of undermining regional security. Qatar backed the Brotherhood with $8 billion in aid after the Egypt election. Saudi Arabia and the U.A.E. welcomed Mursi’s overthrow last year and, along with Kuwait, they have pledged about $15 billion to support the military-backed government.

Occidental’s Middle East asset sale is part of a breakup plan the Los Angeles-based company announced last year to boost its share price. It also intends to spin off its California business and use the proceeds to repurchase shares.

Selling the businesses will give Occidental cash to fund drilling, buy back shares, and extend international contracts, analysts have said. Occidental’s shares have gained about 12 percent since the company on April 25, 2013 said it would consider a breakup of U.S. and international assets, giving it a market value of about $76 billion.

Before it's here, it's on the Bloomberg Terminal.