British Petroleum sent tremors through the international oil industry yesterday by announcing a £30.3 billion sterling agreed takeover of Amoco of the US, in what was billed as the world's biggest industrial merger.

The deal will create Britain's largest company, to be known as BP/Amoco. It will have a market capitalisation of $110 billion and 100,000 employees worldwide. About 6,000 are expected to lose their jobs as a result of the deal.

BP shares initially soared on the news, but fell back to close up 22p at 795p. In afternoon trading on Wall Street, Amoco shares were up $6 1/8, or nearly 15 per cent, at $46 1/3. Executives from the two companies say the combination, which will be the third largest oil company in the world, will have the financial scale and global reach eventually to challenge Royal Dutch/Shell, the Anglo-Dutch group, and Exxon of the US for the leadership of the international oil industry.

Sir John Browne, BP's chief executive, will run the new company out of London, with Chicago becoming the centre for the group's extensive US operations.

BP's chairman, Mr Peter Sutherland, will become co-chairman with Mr Larry Fuller, Amoco's chairman, of the combined group. Mr Fuller is due to retire in 2000.

Although it was clear that BP will be the dominant partner, Sir John said: "The deal was done on both sides from a position of strength." The agreed equity split will be 60 per cent to BP shareholders and 40 per cent to Amoco's. The deal values Amoco shares at a 15 per cent premium to Monday's closing price. The companies will seek shareholder approval by October or November, and aim to close the deal by the year-end.

Mr Fuller said he doubted whether a counter-bidder would emerge for Amoco, as the BP offer "was sufficiently strong". And Sir John said BP had already taken steps to avert any battle for Amoco. In the event of a counterbidder emerging, it has the right to buy 19.9 per cent of Amoco's shares at a pre- announcement price. Amoco would also have to pay BP a $1 billion fee if the deal went sour.

The takeover marks an end to a long period of stability among the western world's biggest oil companies. Although there has been growing talk of the need for consolidation in the sector - especially in the light of this year's oil price slump - few industry observers expected any early action. Sir John said yesterday's announcement was not driven by low crude prices. His vision for the new group showed a desire to create a company which had the financial clout to compete for the most desirable opportunities - which in the oil industry usually equates to those with the lowest production costs. Analysts said the deal could transform BP's fortunes. It gives it a significant position in the global natural gas industry for the first time, and propels BP's chemicals division to number three in the world.