Shell said on Monday it would buy the 22% stake it does not own in Shell Canada, which is independently managed, listed on the Toronto Stock Exchange and heavily involved with oil sands production in Alberta.

Shell has said the the deal would speed up decision making and integrate the business into the Shell group.

According to a report in Britain’s Guardian newspaper, several analysts have speculated the move could be a step towards a £230 billion merger with BP.

“A Shell-BP merger would make a lot of sense and would allow [Lord] John Browne [the BP chief executive] to leave his company on a high note,” the newspaper quoted Fadel Gheit, a Wall Street analyst from Oppenheimer & Co as saying.

Earlier this year, BP, which is Britain's biggest company, acknowledged it had been looking at the idea of a merger as part of "scenario planning".

The Guardian reported Gheit and other analysts released research notes last week saying that a merger would allow Shell and BP to make annual savings of more than $US5 billion ($A6.6 billion) and significantly improve the new company’s operating efficiency.

But there would still be big regulatory hurdles to overcome and any such combined entity would probably have to shed some assets.