Chevron set to acquire Texaco

 

Chevron and Texaco are today expected to announce the takeover of the smaller Texaco in a deal which values it at $35 billion (€41 billion). The companies met late yesterday afternoon to decide on the deal.

The combination of the world's fifth and seventh largest oil companies would mark the latest in a rash of industry takeovers.

Both companies are under pressure to create a stronger competitor to rival the global top four Exxon Mobil, Royal Dutch/Shell, BP Amoco, and Total Fina Elf. Three of those firms were made bigger by mergers in the past two years.

Pressure will likely now fall on the rest of the chasing group of global oil companies to find a partner, notably Eni of Italy, ranked sixth in the world, and number eight Repsol of Spain.

A combined Chevron and Texaco would have about 8.26 billion barrels of oil and gas reserves and 2.71 million barrels of oil equivalent per day of production, making it the fourth largest behind Exxon Mobil, Shell and BP.

Texaco and Chevron have nearly 55,000 employees around the world, and hold strong exploration and production positions in West Africa, the former Soviet Union, and Latin America. Already, they run Caltex, a refining and marketing joint-venture in Asia. The companies anticipate more than $1 billion in cost savings from the transaction.

They have had talks with joint venture partners to alleviate antitrust concerns. Experts say divestments would probably involve filling stations on the west coast of the US and other overlapping assets.