Shell Discusses European Venture With Texaco, Others

Royal Dutch/Shell Group said Monday that it is talking with several major oil companies, including Texaco Inc., about a European refining and fuel-sales joint venture as a way to cut costs and boost profit.

Such a venture between the world’s largest publicly traded oil company and Texaco, which ranks seventh, would make it easier for the companies to trim regional capacity to make gasoline, diesel and heating oil. Europe’s refineries can top demand for petroleum products by 2.9 million barrels a day, Shell said.

A Shell-Texaco alliance in Europe would follow the path blazed by British Petroleum Co. and Mobil Corp., which said in 1996 they would combine European refining and fuel sales to save $500 million a year and get a 12% market share in Europe. Shell confirmed it is looking for a similar European arrangement.

“We are talking to a number of parties” in the European fuel-making business, said Cerris Tavinor, a spokeswoman for Anglo-Dutch Shell, “and Texaco is one of those parties.”

Texaco said it is reviewing its European refining and fuels sales but stopped short of saying it was in talks with Shell.

Tavinor declined to comment on speculation in London’s Sunday Express newspaper that Shell was preparing a full bid for Texaco. That would create a company with revenue of $173 billion a year and bolster Shell’s position as the global oil leader.

Texaco said talk of a full-blown merger between the two companies was “wild, unsubstantiated speculation.”

But speculation is growing that more big oil companies may be contemplating takeovers of other firms following British Petroleum’s decision last month to buy Amoco Corp. for $53 billion.

Texaco shares fell $1.56 to close at $55.56 on the NYSE.