Oil giant BP is weighing up whether to commit up to £3.7 billion on a plan to revive its flagging share price, it has been reported.
While the massive buy-up of its own stock would help rehabilitate the company in the eyes of the City, it risks angering American authorities just two years after the fatal Gulf of Mexico oil spill.
Shares are still a third lower than before the blow-out and The Sunday Times said directors believe a big cash return to investors was the best way to lift the price and reduce the chances of an opportunistic bid from a rival.
American oil giants Exxon and Chevron are seen as possible suitors for BP, while Royal Dutch Shell has also considered a bid in the past.
The speculation comes days after BP agreed to pay £2.8 billion to settle American criminal charges arising from the spill.
However, a trial on civil claims is due to go before a judge in New Orleans in February. Under the US Clean Water Act, which specifies damages per barrel of oil spilt, BP could face a bill as high as £13 billion.
An analyst quoted in the report said: "Giving back money to shareholders would be a red rag to the Americans. But it's clear they have to do something to get the share price moving."
It is thought that BP believes it could safely spend up to £3.7 billion on a buy-back, although it may also increase its dividend, which was stopped after the disaster but has since been restored at just over half its previous level.
The share performance is important to ordinary investors and savers as in the past BP has accounted for around one pound in every six invested by pension schemes.
The company has sold off large chunks of its business as part of efforts to raise cash to pay the costs of the 2010 Deepwater Horizon disaster.