Shell considers bid for BP amid rival’s net zero crisis

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Shell is considering a takeover of BP after the oil giant’s “botched” pivot to net zero left it vulnerable, according to a Bloomberg report.

As reported by Bloomberg, Shell is seriously exploring how feasible and beneficial a takeover of BP would be. Shell is reportedly engaging with advisers to plan out what a deal would look like.

It comes amid turmoil at BP over its approach to green energy. The company vowed to slash its oil and gas production and invest heavily in renewables in 2020, making the boldest commitment to net zero in the fossil fuel industry.

However, the strategy failed to deliver financial returns and BP has recently abandoned the plans in favor of a return to focusing on oil and gas.

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The muddle at BP has left its stock price languishing. Shares have slumped 30% over the last 12 months and are just 11% above where they were when BP launched its green energy strategy.

By contrast, Shell’s stock has rallied almost 90% over the last five years as it has focused on oil and gas. The divergence has left BP worth just £55 billion, compared to Shell’s £148 billion.

A combination of Shell and BP has long been speculated but a deal would be likely to face intense political scrutiny and attract the attention of competition regulators.

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A “swoop” for BP could help Shell boost output by gaining more exposure to the United States. BP has significant operations in the US Gulf of Mexico and announced a fresh discovery there at its Far South prospect just last month.

It would also help Shell build the scale to better compete with US oil giants, whose value dwarfs Shell. Exxon Mobil, for example, is worth $459 billion (£345 billion).

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