Alaskan Agreement Helps Clear Way for Arco Deal

BP Amoco PLC
2 December 1999


ALASKAN AGREEMENT HELPS CLEAR WAY FOR
APPROVAL OF BP AMOCO DEAL WITH ARCO

BP Amoco today cleared the way in Alaska for its proposed combination with
Atlantic Richfield (ARCO).

Subject to changes it described as 'immaterial to the synergies expected
from the combination with ARCO', the company said the provisional
agreement struck last month to sell reserves and exploration acreage to
encourage future competition in the state has been approved by Alaskan
State Governor, Tony Knowles.

BP Amoco chief executive Sir John Browne said: 'This is excellent news.
Reaching agreement with the state of Alaska is a critical step in the
process of securing US regulatory consent to the ARCO transaction.
Together with the agreement we recently reached with the Governor of
California, we have now addressed the key concerns of the two states most
impacted by the ARCO deal.

'We believe this will provide us with the foundation for more focused and
productive discussions with the Federal Trade Commission (FTC). Our aim is
now to progress those discussions quickly and constructively so that we
can get on with bringing BP Amoco and ARCO together and remove the
uncertainties facing the customers, suppliers and staff of the two companies
in Alaska and the US West Coast.'

' My goal is to have a healthy, growing oil and gas industry in Alaska and the
Charter agreement with BP Amoco is an important step toward achieving that
goal,' said Alaska Gov. Tony Knowles. 'This agreement provides for continued
competition on the North Slope by ensuring that another major player or
players will be active in Alaska while strengthening our partnership with BP
Amoco. It's time to get on with business and get Alaskans back to work. By
signing this agreement today and sending it on to federal regulators, we
signal that Alaska is once again open and ready for business.'

'This agreement is good for BP Amoco and good for the state,' said BP
Amoco deputy chief executive Rodney Chase. 'It sets the stage for
increased North Slope investment and increased Alaska production.'

BP Amoco and the state finalised the agreement announced today after a
series of town-hall meetings and a three-week public-comment period in
which Alaskans expressed support, by a margin of two-to-one, for the main
elements of the provisional deal announced on November 5.

In response to concerns that emerged during the public comment period, BP
Amoco agreed:

*To eliminate price and volume provisions in the gas portion of the draft
agreement and to make natural gas available at a competitive price to be
agreed between BP Amoco, the state and prospective buyers

*To publish an annual report detailing the company's progress towards the
environmental and community commitments made in the agreement

*To guarantee by contract, $17 million in spending on oil spill response
research and development; 'orphan' site clean up and assessment;  and
pipeline oversight by the state. 'Orphan' sites are sites created and
abandoned by other companies

*To clarify that BP Amoco's commitment to accelerate introduction of
double-hull tankers by one year applies to both chartered and company-
owned vessels. BP Amoco has also agreed to publicly support the current
vessel replacement requirements of the Oil Pollution Act of 1990 should an
organisation of which BP Amoco is a part decide to lobby for modification
of those requirements

*To purchase, using a pre-determined pricing formula, up to 30,000 barrels of
oil a day from minor producers with less than $1 billion in worldwide
assets. The draft agreement called for purchase of up to 25,000 barrels
per day

*To sell a 40 per cent interest in the Alpine field. The draft agreement
called for the purchasing company to hold a 40 per cent interest in the
field after the sale.

*To sell at least a 50.01 per cent interest in the Kuparuk field. The
draft agreement called for the sale of a 40 per cent interest.

Today's deal confirms BP Amoco's undertaking in the provisional agreement to
sell 175,000 gross barrels of production a day, 620,000 acres of state and
federal exploration leases, and matching stakes in the Trans-Alaska pipeline
system (TAPS) - all subject to completion of the combination. The company will
also divest the operatorships of the Kuparuk and Alpine oil fields.

The disposals will have minimal impact on the $1 billion of synergies
targeted worldwide from the combination of BP Amoco and ARCO. The company
estimates that it can still deliver over $140 million of the $200 million
in synergies first targeted in Alaska because the agreement preserves BP
Amoco's and ARCO's interests in the Prudhoe Bay field under a single
operatorship.

More than half a dozen major companies have already expressed strong
interest in the properties on offer and have begun visiting data rooms
opened in Alaska to enable would-be buyers to prepare for bidding.

Under the terms of today's deal, BP Amoco will retain over half of the
production currently coming from ARCO in Alaska, increasing BP Amoco's
Alaskan output by about 175,000 barrels a day. The company will also
retain over a million acres of exploration land  on the North Slope,
including 430,000 acres in the newly-opened National Petroleum Reserve
area.

The company has also agreed to meet a range of other Alaskan State
requirements, including:

*Sale or transfer of Jones Act ships to buyers of production
Making available certain of its proprietary exploration data and
encouraging partners to do likewise

*Reviewing its corrosion-monitoring program for in-field flowlines at
least twice a year with State environmental agencies

*Allowing continued access by other companies to its North Slope spill
response facilities

*Hiring qualified Alaskans when they are available, encouraging BP Amoco
contractors and service providers to train and hire qualified Alaskans,
and using Alaska-based companies to fabricate production facilities in
Alaska when feasible

*Donating the equivalent of 0.2 per cent of production a year to Alaska,
currently estimated at approximately $6 million a year, of which 30 per
cent will go to the Alaska university system.