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The evergreen rumor that Shell could be looking to buy BP returned to the market Tuesday -- and sent share prices of both companies higher.
Ever since Lord Browne, BP's former chief executive, confirmed in his 2010 memoir that cautious talks to this effect took place in 2004, the potential megamerger of the two London-listed oil giants has whetted appetites in the markets.
Yet BP and Shell declined to comment on the rumor, and industry sources were sceptical of the deal. Neither company appears to have retained new banking advisers, often a sign that a deal may be on its way.
So why is this rumor resurfacing now?
Low oil price
It's hard to believe that Brent crude was trading at over $100 a barrel as recently as mid-September; now analysts seem to be competing for the gloomiest picture of when, and at what price, the trough in oil prices will come.
This uncertainty has hit oil majors' share prices, as it means production remain high, even as the price it sells oil for falls. As such, the potential purchase of such a company could look more attractive.
Yet a bid would have to be based on a belief that the oil price will recover in the medium term, which requires quite a lot of confidence at the moment.
"It's an unfriendly oil price that gets valuations where someone on a spreadsheet thinks: 'I could do something'," Kit Juckes, global head of foreign exchange strategy at Societe Generale, told CNBC.
Just a few weeks ago, equity analysts at Oppenheimer published research arguing that, with the falling oil price, and BP currently trading at the lowest price/earnings ratio (around 7 times earnings) of its peers in the oil sector, the company could become a takeover target.
The company's market value has plunged, but it is still one of the biggest dividend payers in the FTSE 100, which could mean that an acquirer would have to pay a substantial sweetener to get shareholder support.
Several analysts contacted by CNBC were extremely cynical about the prospects of a deal, with one dismissing it as "just trader chat," although they declined to be quoted on the record.
Their reaction can be summed up like this: Ultimately, why would Shell, which has been selling off assets in recent months under new chief executive Ben van Beurden, undertake a huge acquisition which would take years to complete, and have the main effect of increasing its exposure to a similar business model?
There are also pretty clear business overlaps between both companies, in terms of geographies and business areas, which might concern European competition authorities.
Both companies have substantial Russian interests, including BP's stake in Russian oil giant Rosneft, which has been hit by sanctions from the Western powers following the dispute in Ukraine. If you were running Shell in 2014/5, why would you expose your business to more Russian oil?
- By CNBC's Catherine Boyle