BP's Ambitious Merger with Amoco Raises Industry speculation

The planned merger between British Petroleum (BP) and the US-owned Amoco has sparked speculation that Sir John Browne, BP's group chief executive, aims to create a super-league player in the oil industry, rivaling Exxon and Shell. The deal, set to be completed next year, will form a London-based BP Amoco group, with potential job losses and regulatory scrutiny looming large. Critics argue that the takeover contravenes BP's earlier commitment to remain in Cleveland, Ohio, where it established its North American headquarters after acquiring Standard Oil of Ohio in 1987.

Key Takeaways:

• The proposed merger between BP and Amoco could result in the loss of approximately 1,500 jobs in Cleveland, Ohio.
• Sir John Browne, BP's group chief executive, has a reputation for proposing radical solutions to industry problems, having established a joint venture with Mobil to pool refining and marketing resources in Europe.
• The deal will strengthen BP's position in the US refining petrol market, while also expanding its research and development efforts through a strategic alliance with Statoil.
• Sir John has engaged in dialogue with Greenpeace, recognizing the environmental implications of burning fossil fuels, and has described the Amoco takeover as the most exciting development in his career with BP.
• The combined financial strength of the two companies will not necessarily shield them from the challenges facing the oil market, with most analysts predicting tough conditions ahead, despite the merger.

Statistics:

• 1,500 jobs at risk in Cleveland, Ohio, due to the transfer of administrative functions.
• BP's current headquarters in Cleveland is a 45-storey tower block.
• Sir John Browne has spent 32 years with BP, including postings in the North Sea and Alaska's North Slope.
• BP aims to achieve at least $2 billion of extra income by the end of 2001 through the merger.

Sources:

• None cited