Newspaper article THE JOURNAL RECORD

CONOCO Waves Flag in Support for Phillips Merger

Newspaper article THE JOURNAL RECORD

CONOCO Waves Flag in Support for Phillips Merger

Article excerpt

As he cheerleads for his company's planned merger with Phillips Petroleum, Conoco Chairman Archie W. Dunham has added a new rationale for the deal that would probably not have been mentioned before Sept. 11: energy security.

Dunham at first cited the usual reasons for the union of Conoco and Phillips, like enhancing shareholder value and improving competitiveness. But in recent statements about the merger, which would create the world's sixth-largest oil concern, Dunham has highlighted the fact that the combined company would have more than 70 percent of its oil and gas reserves in the North Sea and North America, regions free of the political risks in the petroleum-rich Persian Gulf.

"This is good for the United States," Dunham said. "It's good for energy security."

The stance is somewhat unusual for Conoco, which, after all, has historically been a trailblazer, entering countries where there is plenty of political risk while other companies held back. It has led the effort to repeal the Iran-Libya Sanctions Act, which prohibits U.S. companies from investing in those countries, paving the way for European and Asian oil conglomerates to develop some of the best oil and gas fields in the world.

Industry experts said Dunham's comments did not mean Conoco was abandoning the campaign to repeal sanctions or its interest in natural gas projects in places like Saudi Arabia and Indonesia. The language is aimed at regulators, politicians and the broader public, experts said, to persuade them to support the merger.

"By tying the merger to a timely issue, one that the public is very sympathetic to, Conoco hopes to get the merger through the regulatory process with a minimum of pain," said Lawrence J. Goldstein, president of the Petroleum Industry Research Foundation.

Pain would mean the kind of forced divestitures of important assets that the government required when it approved the mergers of Exxon and Mobil and of BP and the Atlantic Richfield. It is not clear, in fact, whether the businesses of Conoco and Phillips overlap enough to require selling assets. But highlighting the merger's contribution to national security does not hurt. …

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