Chevron and Texaco Confirm $US100 Billion Merger

Oil giants Chevron and Texaco have confirmed their planned $US100 billion merger, which would create the world's fourth-largest energy company.

The newly combined San Francisco-based ChevronTexaco expects to cut costs by $US1.2 billion per year by combining operations, officials said. Plans also include the elimination of approximately 4,000 jobs or 7% of workers at the two companies, which have been in merger discussions for more than a year. Regulatory approval will be required to execute the merger plans.

How hard information technology will be hit by the planned job reductions - if at all - remains unknown.

In its announcement this morning, company officials identified one of the key benefits of a combined company as a broader portfolio in advanced technologies, including e-business ventures.

Both Texaco and San Francisco-based Chevron are implementing electronic-procurement technologies from Ariba Inc. in Mountain View, Calif.

Internally, White Plains, N.Y.-based Texaco is working with consultants from New York-based PricewaterhouseCoopers to implement Ariba's buy-side procurement software, a project it expects will be completed by the end of the year and that will cut procurement costs "substantially," said Greg Vesey, Texaco's vice president of e-business.

Chevron and Texaco also are partners in PetroCosm Corp., an online business-to-business marketplace for oil and gas companies. In July, Houston-based PetroCosm conducted a reverse-English auction for Texaco, through which the company purchased drilling equipment.

Texaco also has created an internal $US20 million venture-capital fund to finance e-business initiatives put forth by its various business units.

In addition, Texaco has implemented an extensive intranet application, known as PeopleNet, which functions as a worldwide knowledge base for far-flung workers.

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