Possible Shell-BP merger: an African Gas Giant?

A Shell takeover of BP remains a possible, despite Shell's denial. Guess where in Africa the two oil giants have long since merged. We look at the consequences.

By Jeremy Gaines and Christian Hiller von Gaertringen

Shell is holding early-stage talks to acquire BP in what would be the largest oil deal in a generation, the Wall Street Journal reported on Wednesday, 25 June. This take-over would combine Shell with a EUR178 billion market capitalization and BP worth EUR66.5 billion on Thursday and in terms of revenues would create the world’s largest IOC.

On 26 June, Shell, however, published a communique saying that has not been actively considering making an offer for BP and confirms it has not made an approach to and that no talks have taken place with BP.

Even if this denial is unequivocal, the possibility of such a transaction is now on the table. Let’s examine what consequences this could have for Africa, a continent where BP and Shell have long since been particularly active. Let us have a look at Shell first:

Shell’s footprint in Africa

After more than 60 years of operating onshore oil fields in the Nigeria’s South South, where it was the first company to discover oil in commercial quantities back in 1956, the Anglo-Dutch major is shifting its focus across the continent—divesting from legacy downstream and onshore assets while doubling down on deep-water production and clean energy investments. Shell is simplifying its portfolio in Africa to focus capital on assets in deep-water, LNG and low-carbon energy.

Earlier this year, Nigeria approved Shell’s USD2.4 billion sale of its 30% stake in the Shell Petroleum Development Company (SPDC) joint venture to Renaissance Africa Energy, a consortium of Nigerian and international investors. The deal, which covers 15 onshore leases and the strategic Trans-Niger export pipeline, marks Shell’s exit from the troubled onshore production in the Niger Delta, plagued for decades by oil spills, sabotage and environmental damage. In one of the ironies of history, Shell’s predominant position in Nigerian onshore oil production was triggered by BP’s assets in that country being nationalized in 1979.

Shell is retaining its interests in Nigeria’s deep-water offshore operations. Its subsidiary, Shell Nigeria Exploration and Production Company (SNEPCo), continues to operate the Bonga field with a 55% stake. In late 2024, the company reached a final investment decision on the Bonga North development.

Beyond upstream oil, Shell maintains a strategic foothold in gas infrastructure. It owns 25.6% of Nigeria LNG (NLNG), one of Africa’s largest liquefied natural gas exporters, and operates Shell Nigeria Gas, which supplies industrial customers.

Shell’s ambitions beyond fossil energy

But Shell’s African ambitions go beyond hydrocarbons. The company is scaling up investments in clean energy, particularly in West Africa. In 2022, Shell bought Daystar Power, a provider of solar energy to commercial clients, giving Shell an operating presence in Nigeria, Ghana, Senegal, Ivory Coast and more recently South Africa. Of late, it has also signalled its intention to enter the off-grid electricity supply business where potentially it could trade in its oil dominance for power over power…