I am George S. Spindler, Senior Vice President for Law and Corporate Affairs of Amoco Corporation, which is an integrated oil and natural gas producer, crude oil refiner, petrochemical manufacturer, and marketer of gasoline and other petroleum products. Amoco announced on August 11, 1998 an agreement to merge the corporation with British Petroleum Company, subject to shareholder and regulatory approvals.

As reported in the press, this is the largest industrial merger in history. Combining the operations of Amoco and BP will create a company comparable in size to the two industry leaders, Shell and Exxon. However, achieving size is not the purpose of the BP Amoco merger; it is merely one of the outcomes. More important is the distinctive quality of the combined portfolio of assets, the enhancement of organizational capabilities, the global reach and the increased competitiveness achieved by combining our operations. This merger will create significant value for our shareholders, not because the merged company will be bigger, but because as good a each of us could be separately, BP Amoco will be better -- much better -- than the mere sum of our two organizations. This improvement will benefit not only our shareholders, but the consuming public as well.

I acknowledge that there is some human cost associated with this transaction. We have estimated that 6,000 jobs will be lost. The impact will be felt in more than 30 offices around the globe, but workers in Cleveland, Houston and London will be most affected. This is a harsh reality in an increasingly competitive world, but we are committed to treating all those who lose their jobs with respect, dignity and fairness. These are all good people with good training and valuable experience; they all have the ability to land on their feet, particularly in today’s robust economy. For those who remain with BP Amoco -- and that means more than 90,000 people around the world, an overwhelming majority of the existing workforce -- they will be working for a bigger, stonger company with greater opportunities than ever before.

I will be happy to address any issue you may wish to raise, but I will focus my formal testimony on two important issues: First, why the merger is likely to enhance competition and benefit consumers; and second, why this merger should pose no significant issues with respect to energy supply or BP Amoco’s continuing commitment to investment in the United States. Finally, I will share my personal views on whether this merger will lead to a broader consolidation in the petroleum industry.

I sincerely believe that this merger will benefit US consumers. There is very little competitive overlap between BP’s and Amoco’s operations in the United States, and the merger will create a company with a lower cost structure across all product lines, enabling it to compete more aggressively to deliver the products and services consumers want.

We plan to achieve $2 billion in annual cost savings by 2001 as a result of the merger. The history of this industry is that the benefits of efficiency almost always get passed on to consumers. That’s why, in real terms, gasoline is cheaper today than it has ever been. In fact, a gallon of gas is cheaper than a gallon of bottled water.

Our improved cost-structure will enable us to compete more effectively in our consumer markets -- an area where the competitive landscape has changed dramatically. The “gasoline retailing industry” has been completely redefined and greatly expanded.

One example of this change is the convergence of the gasoline and convenience store markets. In the early 1980’s, traditional gasoline marketers started opening convenience stores at their retail sites. Conversely, convenience store chains such as 7/11 started adding gasoline pumps at their stores. As a result, two large industries have converged into one colossal market.

More recently, other merchandisers have started selling gasoline and pricing it as a loss leader to generate additional volume for their core businesses. Entry into gasoline marketing by firms such as Albertson’s, Kroger’s, Food Lion, Richfoods, Shaws Supermarkets, Meijers, Price Club-Costco and Wal-Mart have added new, large and formidable competitors whose low prices are transforming the market. As a result, the battle for market share is being fought across a continually expanding mix of gasoline sellers.

Several traditional gasoline marketers have responded to these competitive changes. The Shell/Star/Texaco marketing joint venture and the Ashland/Marathon partnership claim to have achieved very large cost savings -- a market dynamic that can only benefit consumers. The combination of Amoco and BP in the retail gasoline segment will make us a more efficient and aggressive competitor as well.

As I said earlier, there is very little competitive overlap between BP’s and Amoco’s operations in the United States. Where we do compete, we have small shares of very competitive markets. I will address briefly the effect of the merger in each of our three main businesses in the US: refining & marketing, petrochemicals, and exploration & production.

The combination of Amoco’s and BP’s refineries will result in only a 9 percent share of US refining capacity. This will have no anti-competitive effect in a market that is unconcentrated and highly dynamic. As evidence of this competitive dynamic, I need only point to the remarkable success of Tosco, which entered the market roughly a decade ago and has risen to become the largest independent refiner and marketer in the United States.

Retail gasoline marketing in the United States is also highly competitive and unconcentrated. The two top marketers nationwide have slightly less than 22% of the business. This combined share is dwarfed by the two-firm market shares in many other competitive markets: soft drinks, 74 percent; beer, 62 percent; automobiles, 61 percent; airlines, 38 percent; and paper, 26 percent.

Amoco and BP’s combined retail market share in the United States will be about 10 percent, and we will become the largest retail marketer east of the Rockies. But this will not change the competitive landscape. Gasoline marketing will continue to be a tough, competitive, dynamic business. It is very easy for new competitors to enter the retail gasoline market, and we will continue to see new and different types of sellers enter the business and traditional sellers develop tactics to respond with increased competition. That is the essence of a competitive market. Our merger with BP is, in part, a competitive response to the changing gasoline retailing market -- a market that will remain just as dynamic and competitive after the merger as it is now. Given the number of competitors, the dynamics of the market and the ease of entry, the merger simply will not -- indeed could not -- have an adverse effect on competition.

In the area of petrochemicals, the product portfolios of Amoco and BP have virtually no overlap at all in terms of products that both companies produce and sell in a merchant market. Where overlaps exist, they are of no competitive significance.

In the exploration and production sector, BP Amoco will be the largest crude oil and natural gas producer in the United States, but even so, the merged company will have only a small share of a highly fragmented market. Crude oil production is a global market. BP and Amoco combined will have less than 1 percent of worldwide crude oil reserves and about 2 percent of global crude oil production. Even if the United States is considered as a separate market, which it is not, BP and Amoco combined will have 18 percent of US crude oil reserves and 12.8 percent of US crude oil production -- a small portion of an unconcentrated market segment.

For natural gas, the picture is similar. BP and Amoco combined will have only 7.4 percent of all US natural gas reserves -- again, a small share in a highly fragmented marketplace.

Outside the US, there are even fewer competitive overlaps. Thus, we do not see any antitrust concerns whatsoever associated with the combination of Amoco’s and BP’s refining, marketing, chemicals, exploration and production operations.

Having addressed the issues concerning competition, I would like to add a few words about whether the merger poses any special concerns related to energy supply or investment in the United States. I address this question because the committee’s staff raised this issue with my staff when I was asked to come before you. From my vantage point, this should not be a concern.

Government authority over crude oil and natural gas is ultimately a matter of national sovereignty. Such authority is neither increased nor diminished by virtue of the nationality of the company that produces the oil or natural gas. Thus, the merger of Amoco into BP -- a British company -- will not alter the ability of the American government to exercise sovereign authority over Amoco’s reserves and production in the United States. Likewise, Amoco’s reserves and production outside the United States are within the jurisdiction of various foreign governments; the merger will not change this either.

There is also the question of whether BP Amoco will be as sensitive to US policy concerns as Amoco has always been. I believe the answer is yes. I cannot speak for BP, but I believe that, ever since acquiring substantial assets in the US more than ten years ago, BP has been sensitive and responsive to US governmental concerns. They have conducted themselves as a truly trans-national company in a global industry. The merged company will have an even greater percentage of its assets in the US, so this is unlikely to change.

I also want to reassure you that BP Amoco will remain heavily involved in and committed to finding and developing hydrocarbon reserves in the US. As only one of many examples of this commitment, I would point to the deepwater Gulf of Mexico where we will be bringing new fields onto production over the next several years. As I stated earlier, BP Amoco will be the largest producer of oil and natural gas in the United States. Having gained that position in the world’s largest and most open energy market, we will have no intention of forfeiting it to others. BP Amoco will be a major player here for many, many years into future.

I state this confidently because the merger of BP and Amoco will produce a global company with the resources, capital and cost structure to compete effectively in the intensely competitive global energy business. We will have the staying power both here and abroad. I have discussed the competitiveness of the US gasoline market, and I can assure you that the international petroleum business is every bit as challenging and dynamic, with new entrants such as national oil companies increasing the competitive pressure everywhere in the world. Today, more than 100 companies in the world produce crude oil and/or natural gas. The new enterprise formed by the merger of BP and Amoco will be able to survive and prosper in this new world.

Finally, I would like to close with a few personal observations about industry consolidation. Several years ago I concluded that a certain degree of consolidation in the petroleum industry was inevitable. We have already seen this happen. Most of the consolidation has been achieved contractually through alliances, joint ventures and partnerships, principally in the refining and marketing area. There may be additional consolidation of this sort, but I do not believe that we will experience a rash of major mergers in the petroleum industry as we have seen in banking and telecommunications.

The oil and gas business is different. This industry has not seen a merger of two major players for more than ten years. In part, this is because no two companies fit together quite as well as Amoco and BP. It is an almost perfect marriage of complementary assets. BP has more oil; Amoco has more natural gas. Our two chemicals product portfolios interlock without overlap. Most of our producing assets are in different places, thus extending our combined global reach. And, on the soft side, our companies share a common management and organizational philosophy. Few, if any, potential merger partners in this industry are likely to find such a superb strategic fit; and in the absence of complementary portfolios, they will conclude that combining duplicative assets will not create the sort of value necessary to support a merger transaction.

Some have speculated that low oil prices have precipitated this merger. That is not true. Certainly, lower oil prices over the past dozen years have focused our minds on the need to be more efficient in this industry and to improve our productivity. But I believe this is a merger that both sides would have embraced at any oil price.

Thus, I do not view the BP Amoco merger as the starting bell for a round of broad industry consolidation. We may see some smaller transactions, but a wave of merger mania in the oil and gas arena appears unlikely to me.

I hope I have dealt satisfactorily with the issues you asked me to address. I will be happy to answer your questions.