Chevron and Texaco sidestep merger hurdle

19 October 2001

Chevron Corporationand Texaco, both of the US, have sidestepped the final obstacles to their merger and are expected formally to become ChevronTexacoin October after a shareholders' vote. The US Federal Trade Commission approved the merger in mid-September, but the sale of shares in joint ventures with Saudi Aramcoand the UK/Netherlands Royal Dutch/Shell Groupremains unresolved (MEED 24:7:01).

Motiva Enterprises, a Texaco joint venture with Aramco and Shell, is a refining and distributing company based in Houston. Equilon Enterprises, also based in Houston, refines and markets petroleum products and gasoline. It is a joint venture between Texaco and Shell. Although Texaco has been ordered to divest its stakes in the two companies to avoid contravening monopoly laws, it is reported to disagree with its partners on the value of the ventures.

The merger puts ChevronTexaco into the top rank of oil supermajors alongside the US' ExxonMobil Corporation, Shell and the UK's BP. The new company will have reserves of 11,500 million barrels of oil equivalent. The company is active in the Middle East, holding onshore exploration rights in the Neutral Zone between Kuwait and Saudi Arabia. Although it missed out on a place in the gas initiative in the kingdom, there are some indications that the company will have the opportunity to exploit gas in the Neutral Zone.

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