A Challenge to American Oil Giants: Shell Plans to Acquire BP.

Shell Considers Acquiring BP

Shell is considering the possibility of acquiring BP, which could lead to one of the largest deals in European history and create the first European oil giant capable of competing with industry leaders Exxon Mobil and Chevron.

The circumstances for such an acquisition may not be favorable for BP, as the company’s shares have lost nearly a third of their value over the past year, and investors are uncertain about the company's recovery plans. However, the deal could be transformative for Shell, Bloomberg reports.

The Deal Could Be Beneficial for Both Companies

According to UBS Group, the merger of the two London oil giants would create an energy titan with an oil and gas production of about 5 million barrels of oil equivalent per day. This would represent an increase of 85% from Shell's current production of approximately 2.7 million barrels per day, making the combined company the largest privately-held oil and gas producer. In comparison, Exxon averaged 4.6 million barrels of oil equivalent per day in the first quarter, while Chevron produced 3.4 million per day.

Shell is already the world’s largest seller of liquefied natural gas (LNG), and acquiring BP would elevate this business 'to new heights,' according to RBC.

Thus, a deal between the companies could have strategic significance and lead to the creation of a new oil industry giant capable of competing with global leaders. At the same Time, such a merger may require significant financial efforts from Shell as well as addressing a number of issues regarding the companies' assets and production volumes.