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BP Amoco steady on Arco
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August 24, 1999: 10:30 a.m. ET
Oil group shrugs off Alaska governor's threat, aims to close deal by year-end
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LONDON (CNNfn) - BP Amoco said Tuesday that its planned $27 billion takeover of Atlantic Richfield (Arco) was on track to close by year-end despite a threat by Alaska governor Tony Knowles to block the deal.
Knowles called on the U.K.-based oil group to make a series of concessions, including the sale of large parts of its Alaskan oil assets, or face state opposition to the deal. "This represents an unacceptable monopolistic control of Alaska's resources," he said in a speech delivered Monday.
BP Amoco and Arco already dominate Alaska's huge North Slope oil field and its associated infrastructure. The pair control 72 percent of North Slope oil production, 80 percent of the facility's tanker capacity and have a combined 72 percent stake in the trans-Alaskan pipeline.
The companies already have accepted that they will have to sell 360,000 acres of their combined 860,000 acre exploration area to meet a state statute limiting any one company to 500,000 acres. "We are looking forward to sitting down with the state to reach a settlement which is amicable to both sides," a BP Amoco official said.
Knowles said Alaska wanted a say in deciding which assets would be shed and called on BP Amoco to reduce shipping costs through the pipeline to allow competitors into the market. He also called on the companies to increase their commitment to hiring Alaskans and make an endowment to the University of Alaska.
The anticipated reduction of their Alaskan operation at a time when the North Slope's production has started to decline has already led the two oil firms to target the state for job cuts.
BP Amoco has pledged to sell some $10 billion in assets around the world over the next three years with the loss of 14,500 jobs. Around 2,000 will be lost in the United States.
Knowles said that he remained hopeful of reaching an agreement but warned that the state would petition the U.S. Federal Trade Commission against the deal if the negotiations failed.
European regulators have already passed the deal, which the companies said remains on schedule to close by year-end.
BP Amoco (BPA) shares were off 9 pence at 1,224 pence in a weak London market. Arco (ARC) fell 2-1/16 to 91-13/16in early New York trade.
-- from staff and wire reports
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BP Amoco
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