Two Of The World’s Largest Oil Companies, Exxon And Chevron, Discuss Merger And Raise A Red Flag In The Oil Industry

Written by Flavia Marinho

Published on 03/02/2021 at 13:44

Updated on 15/02/2021 at 16:27

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The Merger of Two of the World’s Largest Oil Companies, ExxonMobil and Chevron, Leaves the Oil Market Disturbed, Says Wall Street Journal

According to a report from The Wall Street Journal last Sunday (01/31), the two largest oil companies in the United States, Chevron and ExxonMobil, discussed the possibility of a merger. The talks took place in 2020, after the COVID-19 pandemic impacted oil prices. FPSO Carioca leased by Petrobras and operated by Modec arrives this week at the Brasfels shipyard for integration

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To survive the oil crisis, especially following the detrimental effects of COVID-19 on the sector, the largest descendants of Standard Oil are discussing a merger, reported the Wall Street Journal.

With the merger, the new company would have more than US$ 350 billion in market value, with a daily production of 7 million barrels per day. If realized, the merger would result in the second-largest oil company in the world, behind only the Saudi state-owned company Saudi Aramco.

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Demand has dropped dramatically around the world after the crisis triggered by the coronavirus pandemic, impacting barrel prices. Amid geopolitical disputes, members of the Organization of the Petroleum Exporting Countries (OPEC) decided to accelerate production, causing prices to plummet: for the first time in history, WTI futures contracts traded in negative territory.

Moreover, the renewable energy market is becoming increasingly competitive against fossil fuels, further exacerbating the situation for oil companies.

Although a potential merger between the two American giants may seem like a good solution for those involved, it would face immediate resistance from antitrust authorities around the world, including in the United States.

The Idea of the Merger Sounds Like a Warning for the Global Oil Industry

If the winds blow against the merger between Exxon and Chevron, the idea of the deal sounds like a warning for the global oil industry. The recovery of demand is not coming as expected, particularly in light of the second wave of COVID-19 in the world.

While the global economy struggles, the cash flow of oil companies continues to be eroded. In addition to everything, companies are looking to restore value creation for shareholders. Seven years ago, Exxon was the largest company in the United States, with a market cap of US$ 400 billion. However, a series of misguided strategies allowed technology companies, the “new economy,” such as Apple, Google, and Microsoft, to take over.

In 2020, Exxon stocks fell nearly 29%, while Chevron’s shares decreased by approximately 20%, even with oil prices showing strong recovery in recent months.

Two Of The World’s Largest Oil Companies, Exxon And Chevron, Discuss Merger And Raise A Red Flag In The Oil Industry

The Merger of Two of the World’s Largest Oil Companies, ExxonMobil and Chevron, Leaves the Oil Market Disturbed, Says Wall Street Journal

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Major Oil, Gas, and Energy Event Will Take Place in Brazil: Macaé Energy Will Gather Petrobras, Equinor, Prio, Among Other Suppliers and Energy Executives for Business, Networking, and Employment Opportunities

The Idea of the Merger Sounds Like a Warning for the Global Oil Industry

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Two Of The World’s Largest Oil Companies, Exxon And Chevron, Discuss Merger And Raise A Red Flag In The Oil Industry

The Merger of Two of the World’s Largest Oil Companies, ExxonMobil and Chevron, Leaves the Oil Market Disturbed, Says Wall Street Journal

Also Read

Major Oil, Gas, and Energy Event Will Take Place in Brazil: Macaé Energy Will Gather Petrobras, Equinor, Prio, Among Other Suppliers and Energy Executives for Business, Networking, and Employment Opportunities

The Idea of the Merger Sounds Like a Warning for the Global Oil Industry

For 45 years, Spain and Morocco have been trying to connect Europe to Africa through a project of just 14 kilometers in the Strait of Gibraltar, and an active tectonic fault on the seabed continues to make the project nearly impossible.

At just 14 years old, a boy creates a system without energy, using steel pipes buried in the ground, that irrigates seedlings with moisture from the air, to combat the water scarcity threatening reforestation in northern China.

Where there was only sand and wind at 40 degrees, China built a megacity of 500,000 inhabitants with farms, wineries, and universities in the middle of the desert using melted glacier water from hundreds of kilometers away.

Gepard 1A2: the armored vehicle that fires 1,100 rounds per minute and became a shield against drones in Brazil.

The United States Army has an armored vehicle that reaches speeds of up to 100 km/h, capable of operating normally on different types of terrain and also on asphalt without causing damage; equipped with a 350 hp engine, it can transport up to 9 soldiers — meet the Stryker.

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