BP Chief: Merger with Shell not compelling

When oil prices fell to $10 a barrel in the late 1990s, the world’s oil majors rode a wave of mergers — Exxon and Mobil, Chevron and Texaco, BP and Amoco, and later Conoco and Phillips.
Now age-old rumors of yet another mega-merger have gained steam with the fall in oil prices to the $40 range from last year’s highs. Those rumors include a merger of BP and Shell. But BP CEO Tony Hayward told the Chronicle in an exclusive interview that the idea is less than compelling amid the struggle for access to more resources.
“If you put BP and Shell together, you don’t add anything to the resource base. You just make the challenge twice as big.”
He says the rationale at the end of the 1990s was to gain truly global scope and scale and therefore the wherewithal to take on any challenges. BP was once a sleepy British company before it grew through mega-mergers, and when presented an opportunity too big to handle on its own, BP needed help.
“None of us are in that position today,” Hayward says. “We can all do anything within reason that we want to. We have the scale and scope, the capability , the balance sheet, that allows us to take home some of the biggest, riskiest and most challenging projects.”
And in his view, that’s the role for the world’s largest publicly traded oil companies, to “live on the edge of the energy space.”
So when considering the upside to another mega-merger–aside from inevitable politics and regulations that may block such an effort–Hayward says he doesn’t find the logic of such a union very compelling.
“Sure, you get a couple of years of synergies,” he says. “You have one headquarters, not two. But what do you do two years from now?”

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