Shell Denies $80 Billion BP Merger Talks Amid BP's Strategic Shift

Shell has categorically denied reports of a potential mega-merger with BP, a deal that would have been valued at over $80 billion and would have been the largest energy deal of the century. The denial comes after reports surfaced that Shell was in early talks to acquire BP, a move that would have significant implications for the global energy landscape.

BP has faced financial challenges in recent years, including investor activism from Elliott Investment Management and others. In response, BP launched a "hard reset" strategy in early 2025, focusing on cost-cutting, shifting away from renewables, and doubling down on fossil fuels. This strategy aims to position BP more competitively in the energy market.

Both Shell and BP are ranked highly on the Fortune Global 500, with Shell at 13 and BP at 25. A merger between the two companies, despite its high cost, could enhance Shell's competitive position against U.S. giants Exxon Mobil and Chevron. However, BP's market capitalization of $82 billion trails behind several other major energy companies, raising questions about its long-term viability.

Shell has been clear in its stance, stating that there are no ongoing talks for such a merger. A spokesperson for Shell emphasized that the company is focused on capturing value through performance, discipline, and simplification. Shell CEO Wael Sawan has previously stated that the bar for any acquisitions is set very high, and the company is prioritizing capital for share buybacks. Shell is also undergoing its own revamp, reemphasizing its focus on oil and gas.

BP, on the other hand, has been dealing with significant challenges, including the 2010 Deepwater Horizon tragedy and a 2020 strategy shift to rapidly grow renewables and cut oil and gas production by 40% by 2030. This shift was based on the belief that global oil demand was peaking. However, BP's new CEO, Murray Auchincloss, has reversed this strategy, focusing on oil and gas investments and divesting from renewable energy projects.

BP is currently selling off various assets, including its U.S. onshore wind portfolio, a 50% stake in its Lightsource solar business, and much of its global offshore wind business through a joint venture with Japanese utility JERA. Additionally, BP sold a $1 billion stake in the TANAP gas pipeline to Apollo Global Management and is reviewing its Castrol lubricants business and retail fueling operations in Austria.

BP chairman Helge Lund, who supported the company's push into energy transition businesses, is set to step down, most likely in 2026. The current record for oil and gas deals is the 1999 merger of Exxon and Mobil for over $80 billion. A year prior, BP's nearly $50 billion acquisition of Amoco set a short-lived record. However, BP's recent struggles have raised questions about its future direction and potential for mergers or acquisitions.

Exxon and Chevron are the only other players large enough to potentially acquire BP. While their assets may not fit as neatly, either U.S. giant could sell off parts of BP that they do not want to keep. Shell, meanwhile, has considered selling off some of its chemicals business to shore up capital, which includes key assets in Texas, Louisiana, Germany, the U.K., and the Netherlands.