Rumblings in energy circles have it that a monster corporate marriage may be in the early exploratory stages, one that could conceivably unite two of the world’s largest oil companies – Netherlands-based Royal Dutch Petroleum/Shell and French energy giant Total S.A.

Acquisition-minded Total, so goes the talk, is eyeing a possible takeover of RDP, the world’s third largest integrated oil company, and may have already initiated efforts to bring this about.

The validity of such talk is unclear. It is not known whether the two companies have ever discussed the idea of an amalgamation, nor whether Total has yet sought a meeting, either directly or through intermediaries, to propose such a possibility to RDP.

Shell declined comment and Total could not be reached for comment.

Based on 2003 sales, a combination of RDP and Total would create the world’s largest oil company with combined annual revenues of $252.5 billion. RDP’s sales last year were $121 billion; Total, $131.5 billion.

British Petroleum is currently number one with sales last year of $232.5 billion, followed by Exxon Mobil at $213.1 billion.

Scuttlebutt of a possible RDP-Total get-together comes at a time when the Dutch firm is in turmoil. Last January, RDP shocked the investment community by announcing a 20% overstatement of its proven oil and gas reserves. That, in turn, led to investigations by the Justice Department and the Securities & Exchange Commission, as well as the resignations of the company’s CEO and its oil and gas chief.

Following the resignations, there was some speculation that RDP might seek an affiliation with another major oil company to help wash away the scandal.

As a result of the scandal, RDP’s shares have been a dog of a market performer this year. Reflecting the surge in oil prices this year, the stocks of the major oil companies have been on a tear. Not so with RDP. Because of the strife, its stock, which wrapped up last year at $52.39, has turned in a flat 2004 performance, closing Friday at $52.92. Total’s close: $105.09.

Oil expert Alan Gaines, a former crack energy analyst and investment banker, thinks a Total takeover of Royal Dutch makes all the sense in the world in an environment which has seen a growing number of oil mega mergers (such as the creation of Exxon-Mobil and ChevronTexaco) to boost market share and cut costs in an increasingly competitive environment.

Mr. Gaines, a former advisor to takeover artist Carl Icahn in his hostile bids for such energy biggies as Texaco and Phillips Petroleum and currently chairman of Dune Energy, a Houston based natural gas producer, views RDP as an attractively-priced buyout candidate and observes such a transaction would be especially propitious now since its shares, he believes, would be trading 25% to 30% higher if it weren’t for the reserve write downs. Still, because of the write downs, he doesn’t see much of a premium, if any, paid to do a deal with the company.

Mr. Gaines said he’s heard talk both in Europe and Asia of Total’s interest in RDP. “I don’t know if it’ll ever happen, but the story is Total wants to either buy Royal Dutch or merge with it,” he added.

The market capitalizations of the two goliaths are pretty close to each other. RDP’s market cap is about $110 billion; Total, around $136 billion. Presumably, any deal between the two giants, assuming one could be effected, would involve some sort of an exchange of stock, given what would be an astronomical buyout price.

Meanwhile, there are many unknowns. Whether RDP would be amenable to such a transaction is anybody’s guess. Likewise there’s the question of how the Dutch and French governments would relate to a transaction involving a company which, some say, is not out of the woods yet with its reserves overstatement, an event, it’s felt, that could be followed by additional damaging revelations and the threat of serious litigation.

Money manager Selwyn Ortz of Hong Kong’s H.K. Investments, Ltd., is skeptical of such a deal, nor does he believe RDP needs it. Mr. Ortz, who has a stake in RDP, which he recently increased, said you’re talking about one of the world’s great companies, with proven oil and gas reserves of about 4.5 billion barrels. New management, he believes, will undoubtedly move heaven and earth to restore Shell’s credibility and he reiterates what he told me a couple of months ago, namely that “if you can look beyond the short term, I think you’re looking at a $70 to $75 stock in two years.”