US oil majors Exxon Mobil and Chevron are said to have discussed integrating their companies in what would be one of the world's biggest mergers, creating the second-largest energy firm in the world. Mike Wirth and Darren Woods, the chief executives of Chevron and Exxon Mobil, are said to have discussed the possibility of a merger, according to a report in the <em>Wall Street Journal, </em>citing unnamed sources. The talks were "preliminary" and are not ongoing, the paper said. However, the two firms could pick up the discussion in the future, it added. If the two companies were to join forces, the combined entity would have a market value of $350 billion, placing it below Saudi Aramco, the largest oil-exporting firm in the world, in terms of valuation. Exxon is the largest among the two with a value of $190bn, while Chevron is estimated to be worth $164bn. Their combined production values could reach 7 million barrels per day. However, any plan to combine the two majors, part of the early oil pioneers in the US, could face regulatory scrutiny. Over the past few months, US regulators have raised concerns about the monopolistic tendencies of American tech giants such as Facebook and Google. A combination of two of the biggest firms in the US energy industry, which is already facing stricter regulations under the Joe Biden administration, is also likely to be subject to similar measures. The possibility of such a merger is indicative of the broader malaise in the energy sector due to the Covid-19 pandemic, said Stephen Innes, chief global market strategist at Axi. "I was expecting some sort of amalgamation emerging in the industry but we really thought it would be sort of a bottom-up kind of thing. In other words, the top guys would swallow up small minnows in the overall supply chain, not to have the big ones getting together," he said. Future consolidation in the industry could "create more efficiencies down the road", but also lead to a number of job losses, Mr Innes said. A US champion of energy could also be beneficial for the sector, combining the green strategies of both firms and therefore more likely to toe the line of the Biden administration's clean energy agenda, he added. Exxon Mobil plans to lower the intensity of its upstream emissions by 15 to 20 per cent by 2025. It is also targeting reductions in methane and flaring intensity by up to 50 per cent and 45 per cent, respectively. Chevron has also made investments in carbon capture, utilisation and storage as it plans to lower its greenhouse gas emissions by 5 to 10 per cent by 2023. The Democratic administration plans to accelerate the green transition of the US, the world's largest producer of oil and gas. During his first week in office, President Biden rejoined the Paris Agreement to limit emissions and is also looking to push a $2 trillion renewable agenda across the construction and transport sectors. The administration is also tightening environmental regulations and halted the leasing of public land for oil and gas exploration.