In a swap announced on Tuesday, the state's fifth-largest producer, Atlantic Richfield Co, agreed to trade most of its California production to Mobil Corporation for offshore fields in the Gulf of Mexico.

The move is the latest in a series of acquisitions and departures to hit the state, whose annual production has dropped 20 percent since its peak over a decade ago.

Aera Energy LLC, Mobil's joint production venture with and Shell Oil Co, will acquire Arco's 40,000 barrels a day of California output, giving it more than 300,000 barrels a day of output. That is more than twice the production of its nearest big oil rival, Texaco Inc, and double the output of all small independents producers combined.

"There's less of an opportunity for otherindependents to grow," said Dan Kramer, executive director of the California Independent Producers Association. "In California you grow not by exploration but by acquisitions."Kramer said Aera also would look to acquire more fields in California. Aera spokeswoman Susan Hersberger declined to comment on specific future plans but said, "The market is changing in such a way that there is room for all types of producers."

Arco still has an extensive refining and marketing operation on the West Coast -- its main retail market -- and has no plans to shift its headquarters from Los Angeles.

In general, declining production and a severe recession in the early 1990s have forced a decade of consolidation upon the state's oil producers and refiners.

Unocal Corp sold its California fields in 1996, while Aera was formed last year by Mobil and Shell and several months later No. 2 Texaco acquired a large independent Monterey Resources.

"People are looking at consolidation to cope with (low) oil prices," said FadelGheit, an oil analyst at Fahnestock & Co.

World crude oil prices have fallen 40 percent since the beginning of the year, also pulling down the value of California's thick, gooey crude to four-year lows.

That heavy oil is worth less than lighter crude because it is more difficult to refine and yields less gasoline.

So as revenues fall with crude's collapse, companies like Arco look to trade in heavy oil fields for ones holding natural gas and lighter, sweet oils. That way, analysts said, they do not have to bid up for oil properties with dubious prospects in a falling market.

"(Companies) are looking at asset exchanges or alliances," Gheit said. "That way they don't pay a premium."

After Tuesday's swap, Aera controls more than 30 per cent of the state's 910,000 barrels a day of output, Kramer said.

Also, more than 270 jobs are threatened in the central California oil regions where Arco owned its fields.

While no lay-offs have been announced, Arco said it expects to take a $100 million charge,reflecting a write-down of assets and severance pay. Arco hopes to offset that charge with higher profits from more valuable natural gas from the Gulf of Mexico.

"This is a perfect fit for us ... We're exchanging heavy barrels -- low margin oil -- for barrels with high price realisation," Arco spokesman Al Greenstein said.

Arco also sheds heavy oil not well-suited to its west coast refineries that rely on lighter Alaskan crude, analysts said.

Mobil, by taking the oil from Arco, increases its stake in Aera joint venture and can now use the crude in its Los Angeles heavy oil refinery, which was forced to look to the open market for sufficient crude, analysts said.

"From the perspective of integration, it makes sense, because Arco doesn't use much of that crude at their refineries," an oil industry source said. "Mobil was probably short crude, so Torrance (the refinery) needs more crude than what Mobil produced."