Exxon-Mobil merger set to be approved

Date: 23/09/1999

By Renée Cordes

THE European Commission has signalled that it will approve the proposed merger between Exxon and Mobil next month, allowing the creation of the world's largest oil company with annual sales of €180 billion.

A Commission spokesman said this week that EU officials were "basically" satisfied with concessions offered by Exxon and Mobil, and added that the full Commission was expected to take a final decision on the deal next Wednesday (29 September).

But industry analysts question whether the two companies have provided adequate details of concessions aimed at allaying EU regulators' concerns about overlapping interests.

Key to the deal is Mobil's two-year-old refining and marketing ('downstream') joint venture with British Petroleum, which itself merged with US oil giant Amoco, pooling assets worth €4 billion.

The venture is the second biggest player in the European fuels sector behind Royal Dutch/Shell, with 12% of the market, and number one in lubricants, with an 18% market share.

"I do not think anyone is under any illusion that Exxon/Mobil will be able to retain an interest in the joint venture since this would constitute marketing out of two competing camps," said Doug Leggate, European oil industry analyst at HSBC in London. "Mobil has little choice but to sell its interest in the venture back to BP."

Analysts say time is running out for the companies to map out plans for a possible dissolution of the joint interest and warn that unravelling the deal would be difficult. The BP/Mobil venture operates in 43 countries.

BP manages the greater part of the venture, with a 70% stake in the fuels partnerships which run the refining and manufacturing operations of both companies, together with their commercial and retail networks including 5,600 BP and 3,300 Mobil service stations.