A merger between the second and the third largest oil companies in the United States has been approved by US regulators, just less than a year after it was first announced.

The Federal Trade Commission voted 4-0 to approve the massive oil company Chevron's $39bn (�27bn) acquisition of its fellow oil giant Texaco.

European regulators had already approved the deal.

"Today marks a critically important milestone as we move to establish a premier energy company with the world-class assets, talent, financial strength and technology to achieve superior results," said the chief executive and chairman of Chevron, David O'Reilly.

Mr O'Reilly will be retain his job as head of ChevronTexaco.

Shares in both companies rose on the news. Shareholders will vote on the deal on 9 October.

Not global giant

Chevron will pay for Texaco with shares and take on about $6bn of its debts.

Texaco was the second largest oil company in the US ahead of this deal with annual revenues of $51bn while Chevron's $48bn revenues made it the third largest US oil company.

Analysts say the companies complement each other on the international arena because they own different subsidiaries in oil fields in the former Soviet Union, West Africa, Brazil and other places.

But on a global basis, the new giant will remain much smaller than the true giants, Exxon Mobil, Royal Dutch/Shell and BP.

Sell-offs

At home in the US, the companies have agreed to sell off several subsidiaries to comply with anti-monopoly regulations.

Texaco will sell its refinery and marketing operations and its one third stake in a natural gas pipeline off Mexico, as well as its aviation businesses in several states.

Previous estimates suggest the all-share deal will create cost savings of $1.2bn, though about 4,000 jobs are believed to be on the block as part of the process.

Texaco has 848 branded retail outlets in the UK and owns a refinery in Pembroke in Wales.