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Royal Dutch Shell eyed a move for BP after oil spill

Oil spill: BP still faces the possibility of huge fines from the US government
Royal Dutch Shell weighed an opportunistic takeover bid for crisis-torn BP during the Gulf of Mexico oil spill, according to sources close to the Anglo-Dutch giant.
The Shell board pulled back from making a rescue offer for its longstanding rival on fears that the uncapped legal liabilities could blow a huge hole in BP’s future prospects. But it is understood Shell remains interested in a merger with BP.

At their lowest point in early June, BP shares were trading at just 296p, valuing the group at £55.6billion.

That was less than half the peak value of £123.6billion before the disaster. The group currently has a market capitalisation of £89billion.

BP was able to cap the private-claims from businesses around the Gulf of Mexico region at $20billion after negotiations with the White House.

But it still faces the possibility of huge fines from the US government.

The possibility of a merger between Shell and BP has been discussed before.

In his memoirs Lord Browne, the former BP chief executive, revealed how the BP board had ruled out a merger in 2004 when the UK oil giant would have been larger than Shell.

Shell executives were on alert throughout the Deepwater Horizon catastrophe and the company resolved to step in with a counter offer should one of the American oil giants, Exxon-Mobil or Chevron, bid first. It was widely reported in June that Exxon had hired advisers to look at a possible rescue bid.

Shell was fearful that if BP were to fall to one of the American companies it would become sub- scale among the oil majors.

Senior Shell executives believe the two firms would make good partners and many of their operations are complementary, without great overlap, so substantial cost savings might be eventually achieved.

Although Shell’s board is said to remain interested in a BP merger, it would not, however, be ‘first mover’.

Instead it would be ready to step in should any of its rivals pursue an offer. Shell’s keen interest suggests that if BP were to be put into play there could be an auction with the prospect of a handsome premium.

Shell, which also operates drilling rigs in the Gulf of Mexico, believes its production is run to much higher standards than its competitor, even though its wells are deeper.

The group and its executives have been reluctant to criticise BP publicly in case that might undermine the whole industry.

But Shell has pointed out it would not trust safety to third parties and would, for instance, test all the cement used in deep water wells in its own laboratories.

Shell is headquartered in The Hague, although the larger part of its downstream operations are conducted from the Shell Centre on London’s South Bank. and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

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