Arduous political debate at the highest level. Polarized views. Big business back in the dock. Claim and counter-claim.
Sound familiar? It's just another day in the soap opera existence of the oil industry. Except this time the stakes being played for really are huge. BP Amoco's ongoing battle with the US Federal Trade Commission over its proposed and problematic US $34 billion takeover of ARCO looks set to become a bruising heavyweight encounter in the courtroom.
The FTC, which scrutinizes proposed mergers and acquisitions in the US, voted to block the deal last month, putting on hold a chain of events that everyone else is happy with - the state of Alaska, the companies, shareholders and rivals interested in picking up some exploration assets. Even European bureaucrats - never the quickest decision makers - have agreed.
The details look acceptable. After negotiations, BP Amoco had already agreed with European regulators to dispose of upstream assets to prevent it having too big a share of North Sea production and pipeline capacity. An agreement was then reached with the state of Alaska, with the company agreeing to sell 175,000 b/d of production and associated infrastructure, 620,000 acres of exploration leases and matching stakes in the Trans-Alaska Pipeline System. The new entity would keep just over half of ARCO's output in Alaska, increasing its total state output by 175,000 b/d. It also retains 1 million acres of exploration land on the North Slope.
Many companies have expressed interest in the E&P properties which would be up for sale, and data-rooms will eventually be opened for would-be buyers.
So why is the FTC digging its heels in? It claims the deal "would violate antitrust laws by lessening competition in the exploration and production of Alaska North Slope oil and its sale to West Coast refineries, and in the market for pipeline and storage facilities in Cushing, Oklahoma, thereby raising prices for crude oil used to produce gasoline and other petroleum products throughout North America." It says it will prove that BP had used its market power to maintain higher prices on the West Coast by exporting crude to the Far East.
The companies deny this. Alaska has reiterated its support, putting it at odds with the states of Washington, California and Oregon, who say they will file lawsuits to block the deal.
The truth is that BP Amoco is not able to manipulate the price of crude. The debate is really over the basic political issue of security of supply. Some of those involved have simply sat up and asked the general question as to what exactly is going on in the oil industry. It's up to us to come up with convincing explanations as to WHY mergers such as this must happen.
If the issue goes to the courts, it's in the lap of the gods. It would make much more sense to hold an open debate on the reasons why the deal must go ahead before it ever gets to court, and then reach an amicable and fully understood compromise.
The alarming lack of understanding at the political level both within the US and internationally about the essential facts of life in today's much-changed oil business - upstream and elsewhere - otherwise threatens its very survival. If BP Amoco can't convince allcomers of its good intentions, what hope is there for the rest of us?

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