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    Shell's Offer Too Low

    Texaco's merger with Chevron hangs in the balance.

    Shell Oil Co.'s offering price for Texaco Inc.'s share of their refining and market joint ventures remains too low, Texaco said, which could delay federal approval for its proposed deal with Chevron Corp.

    But Texaco, which is seeking to divest the holdings to facilitate its acquisition by San Francisco-based Chevron Corp., says there are other potential buyers, and that if necessary, its assets could be put into a trust, according to the Wall Street Journal.

    "We're looking for a fair, market-based price, which Shell has not offered to date," Texaco spokesman Paul Weeditz, told the Journal

    Both companies said negotiations are ongoing, but neither provided details about the price dispute.

    Texaco is attempting to sell off its West Coast-based Equilon and East Coast-based Motiva assets to satisfy regulators' antitrust concerns about Chevron's acquisition of Texaco. Plans for the acquisition were announced last year, and analysts expect the deal to be completed later this year. Weeditz didn't name any other prospective buyers of Texaco's interests.

    While Texaco knows the downstream assets raise red flags with regulators reviewing the Chevron Texaco combination, the Federal Trade Commission hasn't determined final divestiture requirements. If Shell doesn't buy Texaco's U.S. refining and marketing interests before Chevron and Texaco shareholders vote on the Chevron Texaco deal, Texaco may place those assets into a trust, the report said.

    The Equilon and Motiva joint ventures have helped the companies cut costs but haven't always provided returns as high as similar operations, analysts have said. Texaco owns 44 percent of the Equilon joint venture, while Shell Oil holds a 56 percent stake. Equilon has an estimated 6.8 percent share of the national gasoline market and an estimated 13.1 percent share of the gasoline market in its 32 state geographic area, according to Texaco's annual report.

    Texaco, Shell and Saudi Refining Inc., an affiliate of Saudi Arabia's national oil company Saudi Aramco, each own a roughly equal share of the Motiva venture. Motiva refines and markets gasoline and other petroleum products under the Shell and Texaco brand names in all or part of 26 states and the District of Columbia.

    Motiva has an estimated 8 percent share of the national gasoline market and about 16.7 percent marketshare in its geographic area, the report said.

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