Investor excitement after The Wall Street Journal reported recently that Shell was in early talks to acquire BP was quickly dampened by Shell’s outright dismissal of the possibility as “market speculation.” But one way or another, analysts and consultants for the oil and gas industry expect further consolidation is coming.
That could have a mixed impact on the pace and direction of the energy transition. On the one hand, experts say the largest publicly traded companies are more answerable for their emissions and required to make more robust disclosures than privately held entities. On the other hand, the types of mergers and acquisitions brewing could also signal that companies don’t see demand for fossil fuels going away any time soon.
A possible marriage of Shell and BP, two of the world’s oil “majors,” would be on a scale comparable with the mega-merger between Exxon and Mobil in 1999 that birthed the largest Western oil company to date. The following decade brought the hydraulic-fracturing shale revolution, which turned the U.S. into an oil and gas exporter and has had big implications for climate change.
“The industry and control of the resource really diversified with all of these small companies, small publics and privates leading the charge on shale. Now post-2020, I think the industry is starting to look increasingly like what we had 20 years ago,” said Andrew Dittmar, a principal analyst at energy research firm Enverus who focuses on mergers and acquisitions, known as M&A.
Last year, oil and gas producers closed $105 billion in such deals, after setting a record of $190 billion in 2023, according to Enverus data.
Many of these deals, such as ExxonMobil’s $60 billion purchase of Pioneer Natural Resources last year, are driven by a strategy of accumulating existing assets in oil-producing regions, like the U.S. Permian Basin, as an alternative to exploring new oil fields from scratch. Some deals give companies the chance to make their operations more efficient and less polluting, at least on a per-barrel basis. All the majors are also members of the Oil and Gas Methane Partnership, a United Nations program for methane emissions reporting and mitigation.
However, a 2022 report by the Environmental Defense Fund found that a greater share of the assets changing hands in deals between 2017 and 2021 moved from publicly owned companies to privately held entities. A number of those deals transferred assets to smaller firms that don’t have environmental commitments—such as to rein in emissions of planet-heating methane or to reach net-zero—from larger companies that have made such commitments, the report said.
“If they’re not producing those barrels of oil, somebody else will,” said Gabe Malek, a Knight-Hennessy scholar at Stanford Law School with a background in climate finance. He previously worked for the Environmental Defense Fund and was the lead author on its 2022 report.
Decisions by the oil majors—ExxonMobil, Chevron and TotalEnergies in addition to BP and Shell—have an outsize effect on the world. They are collectively responsible for quenching more than 8 percent of the world’s oil demand each year and, according to the Carbon Majors database, for around 10 percent of global emissions from fossil fuels and cement production since the start of the industrial revolution.
It would once have been hard to imagine that a company like BP, founded in 1909 as the Anglo-Persian Oil Co., could become the potential target of acquisition by another major.
But BP’s profits and shares have underperformed over the past few years, while the valuations of U.S.-based ExxonMobil and Chevron have blown past their peers. “The North American majors have stayed more focused on their core oil and gas businesses, and that’s led them to outperform their European counterparts,” Dittmar said.
A highly publicized launch of BP’s net-zero strategy in 2020, meant to transform the oil major into a leading energy company by diversifying into low-carbon offerings, ultimately failed to impress shareholders. “It’s really hard to be a disruptor in the energy industry if all of your profits come from the legacy energy industry,” said Andrew Baxter, senior director of energy transition at the Environmental Defense Fund.
Amid a management crisis in 2023, the company pivoted from its pivot as the new CEO sought to return the company to its oil and gas roots, ditching under investor pressure what the company saw as overly zealous short-term climate goals. On top of that, the company has also bled billions of dollars to settle charges and claims that resulted from the catastrophic oil spill at its Deepwater Horizon offshore rig in 2010.
In contrast, investors are more approving of the focus of American oil companies. For instance, “Exxon is not trying to become an offshore wind company or a company that operates solar farms,” said David Root of FFI Solutions, a climate-focused consulting firm. “Instead of dumping all their excess returns into sort of a smorgasbord of renewables, they’re returning that capital to shareholders.”
That is part of a drive by oil and gas companies in recent years to draw investors with attractive returns. In each of the last three years, the majors returned a combined total of more than $100 billion to shareholders through dividends and buybacks.
If they were instead putting that capital “into exploring and developing new oil fields, that would be a clear sign that the energy transition was going horribly,” the Environmental Defense Fund’s Baxter said. “M&A, returning money to shareholders and a reluctance to do exploration is a sign that the energy transition is happening.”
At the same time, bigger companies can throw more of their lobbying weight around to push for deregulation and slow down renewables growth. “They may think that lobbying against certain provisions to incentivize clean energy technology helps them retain a competitive edge, but it’s ultimately reducing overall U.S. competitiveness,” Malek said.
President Donald Trump has installed friendly faces to regulate the oil and gas sector: former New York Rep. Lee Zeldin, who voted against Biden’s climate policy package while in Congress, is leading the EPA; former North Dakota Gov. Doug Burgum, who reportedly attended a meeting before the election where Trump offered to ease regulations on oil production in exchange for $1 billion in contributions from oil executives, is the secretary of the Interior; and Chris Wright, former CEO of the fracking company Liberty Energy, is heading the Department of Energy.
A number of oil companies have backpedaled on previously announced expansions into renewables and doubled down on oil and gas. Mergers aren’t likely to change that equation.
“The industry is retreating from progressive commitments on the climate front. It will be too little, too late, and we will rue the lost opportunities to reduce the harm and the human suffering,” said Richard Heede, director of the Climate Accountability Institute, who launched the Carbon Majors database in 2013.
Clarification: This story was updated July 18, 2025, to clarify that FFI Solutions is a climate-focused consulting firm, rather than a climate-focused investment advisory firm.
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Deep Vakil is a New York City-based investigative reporter and a recent graduate of the Columbia Journalism School, where he was a Toni Stabile Fellow. He is interested in stories about power and money unfolding in this era of climate change. He previously reported for Reuters, covering oil and gas markets, extreme weather, and energy policy across the U.S. and U.K. Originally from India, Deep majored in politics and society at Ashoka University, where he cut his journalistic teeth at the college newspaper.
