Shell is exploring a potential bid for British Petroleum (BP) and has begun consulting advisers on the merits of such a move, according to a Bloomberg report citing people familiar with the matter. Any formal approach, however, is thought to be contingent upon a further decline in BP’s share price and a sustained downturn in oil markets.
The discussions are said to remain at an early stage. According to sources, who asked not to be named due to the sensitivity of the talks, Shell has recently held more serious internal deliberations with advisers on whether to proceed with what would be one of the most significant acquisitions in the history of the oil industry.
BP’s market value has fallen sharply over the past year. Shares in the London-listed company have lost almost a third of their value amid investor dissatisfaction with its crisis recovery plan and a wider retreat in global oil prices. Bloomberg reports that Shell is watching closely to see whether this downward trend continues before taking any decision on a bid.
While the idea of a merger between Shell and BP has been floated occasionally in the past, a concrete move now would mark a dramatic moment for the sector. Once regarded as rivals of near-equal scale and reach, Shell and BP have taken diverging paths in recent years, with Shell now valued at approximately £149 billion, more than twice BP’s current market capitalisation of around £56 billion.
Despite the potential scale of such a transaction, sources indicate Shell is also weighing alternative strategic options. These may include an expansion of its existing share buyback programme or the selective acquisition of smaller energy companies, rather than pursuing a blockbuster deal. Other major oil firms are also believed to be assessing whether they may enter the fray, although none has declared an interest publicly.
A successful takeover would be subject to intense regulatory scrutiny across multiple jurisdictions, including the UK, the European Union, and potentially the United States. Antitrust concerns would likely be central to any official review, particularly given the concentration of market share that would result from a Shell-BP combination.
Any deal would also represent a defining moment in BP’s ongoing transition strategy. The company has pledged to reduce its reliance on hydrocarbons and invest in renewables, but these efforts have failed to convince some investors, contributing to the steep decline in its share price. Shell, by contrast, has sought to balance shareholder returns with a slower pivot towards low-carbon assets, and appears to be in a stronger financial and strategic position.
A merger would offer potential operational synergies, including rationalisation of overlapping assets, improved economies of scale, and enhanced bargaining power across global markets. It could also accelerate Shell’s ambitions in the clean energy sector by absorbing BP’s existing green infrastructure and investments.
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