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Shell fuels rumours of BP buyout plan

Shell has reignited speculation about a potential takeover of BP…

Anglo-Dutch oil group’s boss says a takeover was considered in past two years and refuses to deny it has dropped the idea

Shell has reignited speculation about a potential takeover of BP after its chief executive spoke publicly about the Anglo-Dutch group’s recent interest in buying its fiercest rival, whose share price is still recovering from the Gulf of Mexico blowout.

Peter Voser, the Shell boss, told a German newspaper that Shell had considered a move on BP in the past two years and answered “no comment” to the question of whether that ambition remained.

“I can’t imagine that there was anyone in our industry that didn’t have a look at it. At the end of the day we’re all business people,” Voser is quoted as saying.

Former BP chief executive John Browne revealed in his memoirs that discussions had taken place between the two companies in 2004 when Shell was smaller by market capitalisation.

But Voser’s comments that Shell considered making a bid for BP in the past two years, according to an advance copy of Frankfurter Allgemeine Zeitung, will inevitably rekindle excitement in the City that a mega-merger could still be on the cards. Voser noted that following the oil spill in the Gulf of Mexico in April 2010, BP’s share price fell sharply, and still had not completely recovered.

Equity analysts have speculated over the past 18 months that a BP wounded by the Deepwater Horizon accident was dangerously vulnerable to a foreign predator.

But big state-owned groups from China and Russia were seen as the most likely potential buyers, with all the political ramifications that would come with those kinds of approaches.

BP has recently agreed a multibillion-pound share swap and exploration deal with Russia’s state-controlled oil company, Rosneft, but there would be nothing to stop a Shell bid for BP’s wider share capital.

The London-based BP is still suffering from a near $40bn (£24.7bn) sell-off of global assets needed to pay for the claims and liabilities from the Gulf of Mexico oil spill. At their lowest point in early June 2011, BP shares were trading at just 296p, valuing the group at £55.6bn compared to a high of more than double that before the oil spill – worst such incident in the US.

They have since moved up to 426p but the oil group is still dogged by the US department of justice, which is pressing on with a criminal case and reiterating its belief that it may have been grossly negligent.

Legal specialists have indicated that a successful gross negligence charge would leave BP facing penalties of more than $20bn under the local Clean Water Act.

In the same interview, Voser warned that Europe shouldn’t reject fracking as a means of extracting natural gas from shale. “Europe should know that it’s about the competitiveness of its industry,” he said, after Britain this week decided to allow the controversial shale drilling technique to restart. The US has gained immense industrial benefits from lower natural gas prices over the past few years, Voser added.

The gas price there has fallen hugely after the US allowed its shale gas reserves to be exploited using the process, but the practice is still banned in France due to environmental concerns.


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