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Insight by former Royal Dutch Shell executive on BP-Shell Mega-merger artictle published by Energy Intelligence Group, Inc.

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Shell and BP – merger and demerger? 

By Paddy Briggs    
 
The authoritative oil industry publication “Petroleum Intelligence Weekly” (PIW) has an article about a possible Shell/BP merger in its recent (28th May) edition.

http://royaldutchshellplc.com/2007/05/31/energy-intelligence-group-inc-bp-shell-rumors-revive-concept-of-megamergers/

It points to the recent difficulties of both corporations and to the fact that a combined Shell/BP would have a market capitalisation of $465billion – almost identical to ExxonMobil’s £467billion. The PIW article says that the “portfolios of BP and Shell are considered quite complimentary”.

The PIW article makes mention of Federal Trade Commission current concerns about “market concentration” in New Mexico (broadly the possible creation of regional monopolistic refinery capacity by a suggested merger of US refiners Western and Giant). But PIW suggests that this concern would not be too much of a stumbling block for Shell/BP as combined they would still have less capacity than other refiners such as Conoco-Philips.

This observer would suggest that a sequence of events, which would alleviate any anti-trust concerns, would be as follows:

1. Shell and BP independently recognise that separately they are not immune from take-over either from the Middle East or (more likely and more worryingly) from the Russians.

2. The two giants decide that they can best protect themselves and shareholders by merging.

3. The merged business is then split between the upstream and the downstream both to alleviate anti-trust concerns and as recognition that the two businesses could have more value as separate entities (as last year’s study by Cazenove into BP suggested.

See: http://www.energyinst.org.uk/index.cfm?PageID=1082 )

4. The new upstream company becomes the world’s biggest (private sector) and focuses entirely on Oil and Gas exploration and production.

5. The new downstream company (separately traded on stock exchanges and completely divorced from the upstream) then carries out some heavy rationalisations (e.g. of refineries and retail networks) before becoming not just the leader in Oil Products marketing around the world but the most innovative company and brand. 
 
Paddy Briggs is the managing partner and founder of BrandAware™

Paddy retired from the Royal Dutch/Shell Group of Companies in 2002 after 37 years service. Over the last twenty years of his career he specialised in Marketing and Corporate Communications and worked for Shell companies in a variety of primarily Communications assignments in The Netherlands, Scotland, Hong Kong, London and Dubai. He has travelled widely and during his time in Shell International in London he was the Project manager for the world’s largest brand re-imaging undertaking – Shell’s “Retail Visual Identity” (RVI) project. Paddy visited Shell companies in more than 50 countries during the development and implementation of RVI.

Between 1996 and 2002 Paddy Briggs was based in Dubai in the United Arab Emirates and from here he managed key aspects of Shell’s brand management across the Middle East region. This included the launch of the magazine “Shell in the Middle East”, as well as extensive Corporate and marketing Communications campaigns.

In short, Paddy Briggs is an expert in Marketing and Corporate Communications on a global scale and has a vast insider knowledge of Shell: he therefore has a unique insight into the Royal Dutch Shell Group.

Retired Shell Executive, Paddy Briggs

Retired Shell Executive, Paddy Briggs

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