A merger between ExxonMobil and Chevron seems to have been in the works since last year, the Wall Street Journal reported on Sunday 31 January. U.S. antitrust authorities are concerned about this, even though the deal is reportedly only in the talks stage. Such a merger would still lead to the creation of the second largest oil producer in the world.
A $340 billion ExxonMobil Chevron merger
The project is reportedly only in the preliminary discussions stage
This ExxonMobil Chevron merger is said to be in the preliminary stages of discussions. This is what the Wall Street Journal said this Sunday, January 31, according to its anonymous sources. For the moment, both companies refuse to comment on the situation.
Nevertheless, such a transaction would create the second largest company in the world oil market.
Create the second largest group in the global oil market
With 2020 figures, the market capitalization of the joint venture would reach approximately $340 billion (combined capitalizations of both companies in 2020). This would make it the second largest company in the oil market behind Saudi Aramco and its $1800 billion.
From the investors’ side, this merger is seen as a way to reduce costs for a struggling industry. Therefore, this merger makes sense in the eyes of industry analyst Paul Sankey stating that this hypothetical merger “is a great idea”. But at the same time, voices are already being raised about the risk of infringement of American competition rules.
An operation still very uncertain
Antitrust compliance concerns
Democratic Senator Amy Klobuchar, a member of the Judiciary Antitrust Subcommittee, told Forbes on Monday, February 1:
“This is a prime example of why we need to improve our antitrust enforcement strategies and reform our nation’s competition policy.”
According to her, this ExxonMobil Chevron merger would have serious consequences on the consolidation of the energy sector. Especially since the ambitions of the White House are now directed towards the development of renewable energy.
Joe Biden wants to “get away from the oil industry”
On his second day in office, the president buried the Keystone XL pipeline. As a candidate, Joe Biden promised that he would push the United States to “get away from the oil industry. It is therefore resolutely undertaking a policy geared towards the energy transition.
However, this possible merger would allow the two oil giants to pool their resources to face future situations. In this sense, in a context of declining global demand for oil, supply should soon follow due to the depletion of the resource.