Shell and BP: Plotting a Fossil Fuel Fairy Tale in Mega Merger Mania?

Posted on 12 November 2023 by John Donovan

In the high-stakes world of oil barons and carbon czars, Shell and BP might just be flirting with the idea of a fossil fuel marriage made in heaven. Because, in the grand world of big oil, bigger is always better, especially when everyone else is fretting over minor things like climate change and renewable energy.

Once upon a time, under the starry-eyed leadership of Lord John Browne, BP was the belle of the ball, scooping up Amoco and Arco in a transatlantic love affair. Meanwhile, Shell, not to be outdone and under Ben van Beurden’s watchful eye, waltzed with BG Group for a cool £36 billion in 2016.

But alas, these romantic escapades happened in a pre-Greta Thunberg world, before the Church of England got cold feet about fossil fuels and the UK’s Just Stop Oil movement started crashing the party. And let’s not forget Labour’s Keir Starmer, waving his green energy plan like a chaperone at a high school dance.

Bernard Looney, BP’s former boss, tried to keep up with the green times, announcing a carbon-free strategy that had oil purists clutching their pearls. But, when the oil price tangoed upwards post-Ukraine invasion, he too couldn’t resist the lure of the black gold.

Enter Shell’s new maestro, Wael Sawan, who, with a wink to the Wall Street Journal, assured everyone that the good old days of share buybacks were here to stay. And voilà! Shell is now Britain’s most valuable company, while BP, sans a permanent CEO, lingers in the shadows.

Cue the whispers of a Shell-BP merger, a reunion of sorts since their Shell-Mex and BP days and that 2004 merger tease. After BP’s Deepwater Horizon waltz turned into a nightmare, Shell was rumored to be BP’s knight in shining armor. Fast forward, and the City is abuzz again, with Nick Butler, a former BP bigwig, hinting that BP could be the damsel in distress in this consolidation tale.

With BP’s valuation doing the limbo, Shell’s Sawan, an oil man through and through, might just be eyeing BP as the next prize. After all, who can resist a bargain, especially when BP is known for its prowess in sniffing out new oil and gas fields?

Westminster and Whitehall would undoubtedly throw a fit if an overseas suitor came courting BP, but if BP keeps playing hard to get with its shares, Shell might just make its move. And let’s not forget BP’s interim Canadian chief, Murray Auchincloss, trying on the CEO glass slipper while the hunt for a permanent leader continues.

BP, at a crossroads, could either sharpen its strategy or, like its American counterparts, pump up its carbon footprint for those immediate returns. But Shell might see BP’s green energy dalliance as a deal-breaker.

Yet, if BP’s shares continue to underwhelm, the allure of a Shell swoop could grow irresistibly. After all, in the fairytale world of big oil, where the stakes are high and the carbon is king, who can resist the charm of a storied oil giant?

 Shell and BP are cordially invited to correct any factual inaccuracies in this tale of potential corporate romance.

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