August 25, 2011 / 8:34 PM / 9 years ago

UPDATE 1-Total to merge refining and petrochemicals -paper

* Refining industry under pressure to cut costs

* Chevron merged petrochem/refining arms last year (Adds Chevron restructuring last year, paragraphs 6-7)

PARIS, Aug 25 (Reuters) - French oil company Total (TOTF.PA) is preparing a reorganisation to merge its refinery and petrochemical activities, the newspaper Les Echos reported, citing several trade union sources.

The reorganisation, which entails making the distribution of petrol independent from refineries, is expected to be announced during the autumn and seeks to extract cost savings, Les Echos wrote in an early release of its Friday edition.

At Total, no one was immediately available to comment.

Total petrochemicals has nearly 6,000 employees worldwide, according to the company’s website, and the division’s main product is polymers, used to make plastic products. The refinery business makes fuels or liquefied petroleum gas.

The reorganisation would be Total’s biggest since the world’s fifth-largest private-sector oil company created specialty chemical maker Arkema (AKE.PA) in 2004, Les Echos said.

It would also follow U.S. rival Chevron Corp (CVX.N), the world’s third-largest private-sector oil company, which combined its chemicals and refining operations last year before a restructuring in which it cut 2,800 jobs and sold its British refinery to Valero Corp (VLO.N). [ID:nN11130249]

Mike Wirth, head of the combined Chevron downstream division, told Reuters in May he expected this year’s rise in refiners’ profit margins to be brief because of the growing amount of surplus refining capacity worldwide. [ID:nN02248491] (Reporting by Caroline Jacobs in Paris. Additional reporting by Braden Reddall in San Francisco. Editing by Robert MacMillan)

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