Shell finance director snubs Texaco merger speculation

Steve Hodge, group treasurer of the Dutch/Shell Group Companies, revealed last week that Shell has no intention of undertaking a major merger despite BP’s plan.

Rumours of a merger with Texaco have abounded after Shell said it was talking to the US company about potential co-operation in Europe. The two companies already have refining and marketing joint ventures in the US.

Hodge said anti-trust difficulties were the biggest problem facing a major merger for Shell, the world’s second largest oil company after US world leader Exxon.

‘If we bought another company, the problem would be selling a third of it. I congratulate BP on its Amoco deal. They’ll sell a few things but not much.’

But, Andersen Consulting said last week that its research pointed the way to a new era of mergers, partnerships and alliances in the oil and gas industry. Vernon Ellis, Consulting’s European managing partner, said: ‘I strongly believe it is the thin end of a very thick wedge.’

Hodge said the success of BP’s deal depended on whether the company could achieve merger accounting. ‘If it hadn’t got that, then I doubt it would have done it,’ added Hodge.

Shell has been hard hit by the sharp drop in world oil prices, which has pushed interim net income down 21% to #3.1bn.

Hodge said: ‘We’re very pessimistic about the oil price. We are showing results, but our efforts are going to be matched by a dire environment in oil and chemicals. There are a lot of reasons to be cautious,’ he said.

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