British Petroleum (BP), Britain's giant energy group, and Amoco, the fourth-largest oil producer in the United States, yesterday proposed a US$110 billion merger that would create the world's third-largest quoted energy company. In a move aimed at beating off intensifying competition in the energy industry and creating sufficient critical mass to compete for large projects, the tie-up would form a group with combined revenue of $108 billion and capital employed worth $53 billion. The new company - to be called BP Amoco - would have combined reserves of 14.8 billion barrels of oil and gas equivalent and daily production of three million barrels. In its chemical operations, a $13 billion business would be created from BP's major presence in Europe and Amoco's leading position in the US to provide a powerful platform for expansion in Asia. Amoco is already the largest producer of gas in the US and Canada. BP Amoco would be the largest producer of oil and gas in the US. It would also have prime positions in energy-rich fields in the North Sea and North America. Under the terms of the proposed merger, BP shareholders would own 60 per cent of the new company. Amoco shareholders would have the remaining equity. BP would also provide six out of eight executive directors, and the new company would be based in Britain. The alliance would represent the largest industrial merger in history, as it would have a combined market capitalisation of $110 billion. It would come at a time when the energy market had turned increasingly tough. Oil prices dropped to a 10-year low yesterday, and Amoco last month reported a year-on-year fall of more than 50 per cent in second-quarter earnings. BP chief executive John Browne, who would head the new company, said the merger would be 'a superb alliance of equals with complementary strategic and geographical strengths which effectively creates a new super-major that can better serve our millions of customers worldwide.' BP chairman Peter Sutherland and Amoco chairman Larry Fuller would be co-chairman of the new company. Investors welcomed the proposed merger. Both companies said they expected pre-tax cost-savings worth a minimum of $2 billion annually by the end of 2000, added to earnings already separately targeted by the companies. Initially the synergies are expected to come from a mixture of staff reductions in overlapping areas, but also from more focused exploration. Analysts said there could be up to 6,000 job losses out of a total workforce of 100,000 for the new company. 'We are uniting two excellent portfolios of assets and people to create a group that will have the financial resources, scale and global reach to compete effectively in the 21st century,' Mr Browne and Mr Fuller said in a statement.