According to foreign media reports, international energy giant Shell is working with its advisory team to explore the possibility of acquiring rival British Petroleum (BP). If the deal goes through, it would create a global energy and shipping powerhouse valued at about ￡205 billion, making it one of the largest mergers in the history of the oil and gas industry.
Bloomberg, citing insiders, reported that in recent weeks Shell has been discussing with advisors the feasibility and strategic value of acquiring BP. Any final decision will largely depend on whether BP’s share price continues to slide. Over the past 12 months, BP’s stock has fallen by nearly one-third, due to a lack of investor confidence in its restructuring plan combined with a plunge in oil prices. Shell may also hold off and wait for BP to seek out other potential suitors first.
Reports emphasize that these discussions are still at an early stage, and Shell may ultimately choose to focus on share buybacks and smaller acquisitions rather than pursue such a massive merger. A Shell spokesperson stated, “As we have emphasized repeatedly, our current focus is on continuing to strengthen operational efficiency, maintaining strategic discipline, and streamlining our business in order to fully unlock Shell’s intrinsic value.”
Should these two British oil giants successfully merge, it would mark one of the most significant milestone deals in the energy sector’s history. In fact, such a merger has been floated several times over the past few decades but has never materialized. Historically, Shell and BP have maintained a neck-and-neck rivalry—in assets, operations, and global influence—but in recent years their trajectories have diverged markedly.
The acquisition rumors emerge at a time when BP is grappling with a prolonged slump in its share price. BP’s long-term underperformance stems largely from former CEO Bernard Looney’s net-zero emissions strategy. The new CEO, Murray Auchincloss, announced in February a strategic pivot to refocus on oil, reduce quarterly buybacks, and commit to asset sales.
However, Auchincloss’s plan has failed to restore investor confidence, and combined with downward pressure on international oil prices, BP’s shares have fallen by over 30% in the past year. Shell’s shares, while down about 14% over the same period, still boast a market capitalization of ￡149 billion—more than double BP’s ￡56 billion valuation.
Against a backdrop of global trade tensions and an unexpected OPEC+ production increase that drove Brent crude below $70 per barrel—the very benchmark BP used for its financial targets—investor patience is wearing thin. Activist hedge fund Elliott Management disclosed a 5% stake in BP and has urged the company to adopt more radical measures.
Many in the industry viewed Elliott’s involvement positively, believing it could drive BP’s deeply entrenched renewable energy empire to undergo significant adjustment under pressure from U.S. capital, effectively forcing a return to oil and gas fundamentals. Observers even speculated that Elliott might push for asset spin-offs, strategic downsizing, or a secondary U.S. listing.
After Elliott’s investment was announced, BP’s share price briefly spiked, but over the subsequent months—with investors unimpressed by strategic tweaks—it continued to slip. In Q1, BP’s profits plunged nearly 50% year-on-year, from $2.7 billion to $1.4 billion. Shell, by contrast, reported adjusted Q1 profits of $5.6 billion, down 28% but still beating City expectations.
Shell CEO Wael Sawan told the Financial Times that while they “will evaluate all possibilities,” on balance, “buying back Shell shares is undoubtedly the best option right now” rather than launching a bid for BP. Under Sawan’s leadership, Shell has accelerated cost cuts, shed underperforming renewables assets, and refocused on fossil fuels. Though Shell’s stock has outperformed U.S. peers like Chevron and ExxonMobil in recent years, its valuation still lags behind. A successful acquisition of BP could help Shell regain footing in the U.S. market, where it scaled back after selling Permian Basin shale assets to ConocoPhillips in 2021.
Sawan emphasized that Shell is targeting value-accretive deals, such as its recent acquisition of Singapore LNG trader Pavilion Energy. Shell said the deal will help it meet its goal of growing LNG sales by 4–5% per year through 2030, further cementing its leadership in the global LNG market. The acquisition also brings three ME-GI engine–equipped LNG carriers and two tri-fuel diesel-electric carriers under long-term charter.
Last year, Shell’s marine LNG supply hit a record 1.1 million tonnes. In February, the company raised its long-term global LNG demand forecast—projecting roughly a 60% surge by 2040—and predicted that the number of LNG-powered ships will nearly double over the next five years. Sawan said he believes LNG will become a key part of the energy mix and wants Shell to be the frontrunner.
Through its earlier acquisition of BG Group, Shell secured Singapore’s first LNG import license and has now taken over Pavilion’s LNG bunkering business, which deployed its first vessel in 2024. Pavilion also provides Shell with 2 million tonnes per year of re-gas capacity at the UK’s Grain LNG terminal, as well as additional re-gas capacity in Singapore and Spain.
UK Companies House filings show that Shell International Trading and Shipping Company (Stasco) posted net profits of ￡24.8 million, up significantly from ￡17.6 million in 2023. Annual operating costs for the shipping and chartering segment fell by ￡5 million year-on-year.
Stasco currently operates 22 LNG carriers and manages FPSOs, tankers, bulk carriers, and a research vessel. As Shell Group’s core shipping platform, it not only handles trading and shipping for Shell International Trading Company but also manages trade operations for Shell Energy Europe, earning management fees accordingly.
Last year, Shell also ordered ten 50,000 DWT MR tankers from Guangzhou Shipyard International at $48 million each. Brokers believe these vessels may ultimately not remain under Shell’s ownership; the company could sell them to leasing firms or shipowners and then charter them back under long-term contracts.
According to the latest data from Clarksons Research, BP’s fleet currently comprises 20 vessels: two FPSOs, six LNG carriers, one bunkering tanker, and several offshore service vessels. Reportedly, six MR product tankers built in 2016–17 were sold as a block to ICBC Financial Leasing for $192 million, while BP Shipping retains operational and technical management of the fleet.
