The US Energy Secretary, Mr Bill Richardson, said yesterday the proposed merger of Chevron and Texaco would be positive for consumers, signalling the Clinton administration's support for the $43 billion (€51 billion) deal.
Despite Mr Richardson's comments, the deal must still be approved by the Federal Trade Commission (FTC), where the tie-up is likely to add to growing concerns over consolidation in the oil industry, according to those familiar with the FTC's thinking.
The deal is the second big oil merger since Mr Robert Pitofsky, the FTC chairman, announced in December he would exercise "close scrutiny" of buy-outs in the industry after the approval of Exxon's merger with Mobil.
The preceding deal, BP Amoco's acquisition of Atlantic Richfield, was almost blocked entirely by the FTC. The antitrust regulators filed a suit to halt the deal until BP agreed to sell off $7 billion (€8.35 billion) worth of Arco's Alaska oil assets to Philips Petroleum.
"The fact they are the fifth in a series is a double-edged sword," said Mr William Baer, former head of the FTC's competition bureau, who reviewed the ExxonMobil and BP-Amoco deals. "It plays to the concerns over consolidation . . . but there's also the hope of more efficient production."
The remarks by Mr Richardson, who spoke with top executives of both companies yesterday, indicate President Clinton has decided the deal will do more to reduce prices than cause competition problems.
The administration support comes despite Vice-President Al Gore's repeated attacks on "Big Oil" in the presidential campaign.
Top aides on Capitol Hill said regulators and law-makers were likely to scrutinise how Texaco untangles itself from its US joint ventures with Shell, called Equilon and Motiva. The FTC is likely to look at three areas for overlap: refining, distribution and retailing. Shell's joint ventures include about 24,000 petrol stations and the companies have refining and marketing operations on the west coast.
The agency is also likely to take into account the knock-on effects of the deal, particularly how Shell might react and whether further consolidation is likely.
