The two companies said in a joint statement they were also forming a separate joint venture to combine their polypropylene research and development efforts worldwide to accelerate innovation and improve production.

Polypropylene is a recyclable plastic resin used in a wide variety of consumer applications, including carpeting, upholstery, clothing, packaging, food containers, bottles, appliances, toys and car interiors.

The European joint venture will have a production capacity of 1.2 million tonnes, putting it third behind Shell's Montell unit and Germany's Targor.

The venture will merge the polypropylene activities of Appryl, which has two plants in France and third due to open in Scotland this year, and BP Amoco's polypropylene business at Geel in Belgium.

Appryl, formed in 1986 by ajoint venture between ElfAtochem and BP, has annual turnover of 240 million euros while BP Amoco's European polypropylene turnover is 270 million euros.

The research joint venture will unite Elf Atochem and BP Amoco's current technology and their long-term polypropylene research, with the goal of developing the best technology for a total production capacity of three million tonnes.

Besides its European production, BP Amoco also produces one million tonnes of polypropylene at its Texas plant.

Elf Atochem is the petrochemicals unit of France's second biggest oil company Elf Aquitaine SA. BP Amoco became Britain's largest company by market value when BP bought the U.S.-Based Amoco in August last year. It is currently the world's number two oil company by value.