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KHOU-TV: 11 News (Houston): Are Shell, BP merging?: Is the merger a done deal?

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06:41 PM CDT on Thursday, July 19, 2007
By Lee McGuire / 11 News

What else is there to do on a soggy summer Thursday, than stand outside Shell’s US headquarters, and speculate about the future of the oil industry?

AP

“The merger of Shell and BP has been rumored for at least five years that I know of and people think that it could be a super oil company,” said Andy Lipow with Lipow Oil Associates.

As usual, the rumors are coming from London.

On one day this month the Daily Mail mentioned “red hot rumors,” and the Times of London wrote “the City is awash with talk” of a merger between Shell and BP.

The Financial Times picked up on the talk a week later.

But none of the articles citied any sources.

It’s a rumor oil experts like Lipow have heard before. “But a lot of times we find that there really is no basis in fact behind them other than rumor mongering throughout the industry, or wishful thinking.”

Is the merger a done deal?

A combined Shell/BP would be a powerhouse.

Currently, Valero and ExxonMobil lead the pack in US refining capacity. Shell/BP would eclipse them both.

But experts say a merger would have little if any effect on gas prices—because those are determined by market forces, not market domination.

Then are the government regulators. Unlikely to allow one company to own so many US refineries.

“Well I would say that the merger between BP and Shell is probably unlikely,” said Lipow.

When we asked BP about the merger rumor, a London spokesman said, “This one pops up from time to time, but we never comment on market rumors and speculation.”

Throwing cold water, perhaps, on already puffed-up suspicions about a fuel deal that’s fueling lots of talk.

Shell’s global headquarters has not spoken out about the merger report.

But even though the London press is buzzing about it, few analysts have seen anything to convince them that a merger is really on the way.

http://www.khou.com/business/stories/khou070719_jj_bp_shell.8fab1d6f.html

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