Why BP is key to our national future
At a time when great British companies have become easy prey for buyers from all over the world, the sale of BP is no longer outside the bounds of possibility.
The immediate crisis in the Gulf of Mexico may have passed but a shrunken BP, plagued by the possibility of years of litigation, could still be vulnerable.
Almost every day another part of Britain's industrial and financial fabric is snaffled up by overseas buyers attracted by the relative weakness of the pound (it has fallen 25 per cent against a basket of currencies over the past 15 months) and the UK's free and open capital markets - a legacy of the Thatcher era.
The sale of Cadbury to the voracious American cheese maker Kraft, headed by Irene Rosenfeld, was a psychological blow to the world's biggest nation of chocolate eaters. But it was hard to claim that this loss of this part of our heritage was of strategic importance. Nevertheless, the row over the way the bid was conducted and the consequences for Britain was a defining moment in that it caught the national imagination and thrust overseas takeovers to the centre of the political debate.
BP is in a totally different category in terms of its importance. Since it was founded a century ago as the Anglo-Persian Oil Company, it has represented Britain's strategic interests overseas. It is no accident that when the details of the deal which led to the freeing of the Libyan bomber Abdul Baset al-Megrahi were peeled away, that BP was found beneath the skin. A key figure in the negotiations was former chief executive Lord (John) Browne - the son of a Jewish refugee from the Shoah - who succeeded another Jew, Lord Simon, as chief executive of the oil giant.
Over the decades the interests of BP and that those of the Foreign Office rarely have diverged. It has often been core to our national security, as well as our energy security. That is why it was so curious that in the immediate aftermath of the April 20 explosion on the Deepwater Horizon platform in the Mexican Gulf - as the political pressure was stoked up in the United States in May and June - it was strange to see our own political leaders silenced.
The denigration of the company by the Americans deliberately calling it British Petroleum (a name abandoned a decade earlier) was allowed to go unchallenged even though it did nothing to enhance broader Anglo-American relations. The Prime Minister David Cameron may have now conceded that we are the junior partner in the "special relationship". But it is inexcusable that BP's leadership team of Karl-Henric Svandberg and Tony Hayward (who departed in July to be replaced by the American Bob Dudley) were allowed to swing in the wind. The importance of BP to Britain and its interests around the world is hard to over-estimate.
Much rightly has been made of BP's direct contribution to the UK economy. In the past it has been the biggest single contributor to Britain's exchequer. BP paid £5.4bn in taxes in 2009 and has been forecast to pay as much as £25 billion in the period 2010-13 according to calculations done by City analysts Exane BNP Paribas.
Until the seepage began at the Macondo deep water rig, it has also been the biggest contributor to the nation's pension funds and other equity based savings, paying an estimated £1 out of every £6 in UK dividends.
The higher the global oil price the greater taxes and dividends that BP would generate for the people of Britain. At a time of national austerity and budget constraints, BP remains a key commercial and economic asset. Despite all its faults and mistakes - and one cannot air-brush away a poor safety and environmental in the United States - it has without doubt been one of our few national champions.
Indeed, it is just five years ago that the company's former boss Lord Browne (now an adviser to the coalition government) almost pulled off the greatest coup of all by seeking to unite BP with its biggest European rival, the Anglo-Dutch group Royal Dutch Shell. It was Browne who had earlier fashioned BP as an American colossus with the takeovers of Amoco and Arco (Atlantic Richfield) in 2000.
Where BP has shown clean heels to all of its rivals including Shell and Exxon Mobil - the American behemoth touted as a possible bidder for the British firm - is in its extraordinary ability to find and exploit new oil resources. One of the key measures of success and security for any of the major oil firms is what is known in the industry as the oil replacement reserve ratio. This measures the amount of proved and audited reserves added by an oil company each year against its existing production. The higher the reserve ratio, the better bet that the oil company is considered by investors and the stronger its economic future.
Among the oil majors, BP consistently has been more robust in laying its hands on new oil reserves than its rivals. In recent decades it has sought to minimise its dependence on the volatile Middle East. But the links remain strong and it is no surprise to find that BP has been selected as lead driller at Iraq's Ramaila oil field - a beneficiary of Britain's ill-judged Iraqi war. As a great trading power, Britain's national interests have always been tied up with its biggest firms, dating back to the 17th century and the East India Company. BP is firmly in that tradition and strongly bound up with the national interest.
The more that BP has been weakened by the American attacks the greater the risks that an opportunistic buyer will sweep in to buy it. Clearly, the Chinese with their enormous foreign exchange reserves have the cash and would like nothing better than to secure control of BP's vast resources.
But the Americans, who have already blocked a takeover of a much smaller US oil group Unocol, would never allow such a critical company to fall into Beijing's hands.
Exxon Mobil, which has reportedly hired investment bank advisers to look at a possible deal, is a very different proposition. Since the Exxon Valdez disaster in Alaska in 1989 the world's largest oil company has worked enormously hard to clean up its image and operations to run itself in a conservative, environmentally friendly way. David Cameron could do worse than rule (in advance) that such a transaction would be a deal too far and point out that BP would not be ripe for the picking were it not for the disgraceful way it has been targeted by the White House and American politicians.
Britain has been selling off its commercial crown jewels for too long. It should learn to stand up for its own national interest.
Alex Brummer is City Editor of the Daily Mail