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Liquefied natural gas processing equipment at Shell's Queensland Curtis LNG plant on Curtis Island in Australia. (Ian Waldie/Bloomberg News)

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Shell Plc CEO Wael Sawan said the UK energy company will continue to look for potential acquisitions but warned of the risks inherent in pursuing a major deal.

Speaking in a Bloomberg TV interview March 25, he declined to answer directly if Shell would consider looking at rival BP Plc but said “the bar is high” for any transaction. Sawan said he expects smaller-scale, bolt-on acquisitions when the company does get around to M&A and that they would likely center around upstream production.

“If you’re going to go for a big acquisition, one has to recognize that that can potentially distract,” Sawan said. Shell is always looking at dealmaking prospects in Europe and beyond, he added. It’s about “finding the right time to make the moves in what is a long journey for us.”

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Sawan spoke from New York Stock Exchange, where earlier he delivered an update to investors on Shell’s strategy. Despite speculation over whether the company might move its share listing across the Atlantic, the idea isn’t currently a live discussion, he said, reiterating recent comments from Shell on the matter.

Shell and BP — which invested significantly in clean energy during the height of the environmental, social and governance movement — have been pushing to close the valuation gap with Exxon Mobil Corp. and Chevron Corp., which stuck with oil and gas.

Since Sawan took the helm in 2023, Shell has retreated from its low-carbon strategy, ramped up its natural gas business and sharpened its focus on areas that generate high returns. BP, on the other hand, stuck with its push toward renewables and away from fossil fuels.

Investors have made clear they prefer Shell’s approach. The company’s shares are up 17% over the past two years, giving it a market value of about $217 billion. BP’s stock, meanwhile, is down 4% in that same period, and it’s market value is now about $92 billion.

BP finally backed off its energy transition plans in February and unveiled a new strategy. It has received a lukewarm reaction from investors.

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