BP Amoco's share price rose more than 2%, or 21.5p, to close at 924.5p as institutional investors bought into the stock to raise their holdings in proportion to the size of the new giant.

A company spokesman said it may make more job cuts than the 6,000 announced with the merger in August.

"We said in August there would be 6,000 (job cuts) and we (now) think there may be more but we don't know how many," he said. Any further cuts would be made in the US," he added.

The threat to jobs comes from the falling price of oil, which has dropped this year by 40% to just over $10 a barrel. This could threaten the prospects for further development of North Sea oil fields, which would only be profitable at a higher oil price. BP currently employs 3,500 in its exploration and production arm in the UK, and Amoco employs another 1,000.

Other big oil companies have already announced job cuts, including Shell, Enterprise Oil, and Lasmo. And up to 20,000 jobs are to go as a result of the wave of consolidation that has swept the industry, with mergers between Exxon and Mobil and Total and Petrofina.

Third largest oil company

The Amoco logo will disappear

From today, BP Amoco will be the world's third largest oil company, with a stock market listing in London and 100,000 employees worldwide. Its activities span exploration and production, refining, chemicals, and petrol retailing, with 27,000 petrol stations worldwide. The $57bn (£33bn) acquisition of Amoco was the largest UK cross-border merger ever.

The merger was formally completed after markets closed on 31 December 1998, after the US Federal Trade Commission gave its approval.

As a condition of the merger, the company has already agreed to sell 134 petrol stations and give 1,600 owners permission to end their contracts.

The new company will now face intense competition, with weak demand for oil forcing many firms to cut capacity.

When the merger was first announced in August, the company said that 6,000 jobs would go worldwide. But since then, falling profitability in the oil industry has led many to suspect that redundancies would be more widespread. Sir John Browne, chief executive of BP Amoco, is a tough cost-cutter who is determined to restore profit margins.

The overlap of activities is greatest in the US, where the biggest cuts are expected. The first round of job losses is expected to be announced this week, with the full extent of the consolidation announced by the end of the first quarter.