London — Shell is reportedly evaluating the possibility of acquiring its British oil rival BP, in what could become one of the most significant mergers in the history of the global energy sector. According to sources cited by Bloomberg, Shell has been in early-stage discussions with advisers to assess the feasibility and strategic value of such a move.
The news comes as BP continues to struggle with investor confidence and a floundering turnaround strategy under CEO Murray Auchincloss. BP shares have fallen by over 30% in the past year, prompting speculation that the company may be vulnerable to acquisition interest. Despite the reports, Shell may still choose to prioritize share buybacks or pursue smaller-scale acquisitions rather than a mega-merger.
With Shell valued at approximately £145.6 billion—more than double BP’s £55.9 billion market capitalization—a potential merger would significantly consolidate Britain’s energy sector and reshape the competitive landscape in global oil and gas markets. However, both companies have so far remained tight-lipped. While Shell reiterated its focus on internal performance and simplification, BP declined to comment.
Industry analysts suggest that Shell is unlikely to make a formal bid unless BP signals interest in entertaining a suitor. Any such deal would come at a time when both companies are under pressure to redefine their roles in an energy sector navigating the transition to renewables amid fluctuating oil prices and geopolitical uncertainty.
Auchincloss, who succeeded Bernard Looney after a sudden departure in 2023, has sought to “reset” BP’s direction—proposing a less aggressive climate agenda and renewed investment in fossil fuels. Yet BP’s Q1 2024 profits plunged by nearly 50% to $1.4 billion, adding further fuel to investor frustration and making the firm a potential target for activist investors like Elliott Management.
Shell, meanwhile, reported adjusted profits of $5.6 billion in the first quarter—down year-on-year but still surpassing analyst expectations. CEO Wael Sawan has indicated a preference for share buybacks over mergers at this stage, though he acknowledged the need to weigh all strategic alternatives in a volatile market.
Whether this potential deal materializes or not, it highlights the intensifying pressure on traditional oil giants to remain competitive, efficient, and responsive to shareholder demands as they chart their course through a rapidly evolving energy landscape.
