FTC Nears OK of Arco-BP Amoco Deal

The Federal Trade Commission on Wednesday voted unanimous but preliminary approval of BP Amoco’s purchase of Atlantic Richfield Co., with final approval expected soon, a source familiar with the situation said.

Once a small glitch is worked out, final approval by the commission is expected quickly on the $27-billion merger of the British oil giant and Los Angeles-based Arco.

FTC commissioners had been expected to finally approve the deal to create the world’s third-largest oil company during the closed meeting Wednesday.

However, the agency’s five commissioners ended the meeting without announcing the approval because of the glitch, the source said.

Neither FTC, BP Amoco nor Arco officials could be reached for comment.

The FTC blocked the deal in February over concern that the merged company would control 70% of Alaska’s oil production. West Coast refiners get a large portion of their crude oil supplies from Alaska to produce gasoline and other petroleum products.

BP Amoco produces about 450,000 barrels per day of Alaskan crude, while Arco produces about 350,000 barrels.

BP agreed last month to sell Arco’s oil and natural gas business in Alaska to Phillips Petroleum Co. for about $7 billion, easing concerns at the FTC.

Exxon Mobil Corp. then sued to block the transfer of Arco assets to Phillips, claiming it had been denied the right to buy Arco’s assets first, as called for under a 1964 agreement with the California company. Executives close to the lawsuit said earlier this week that the companies were nearing a compromise to avoid a court battle.

BP also said it would sell some of its oil pipeline and storage facilities in the Midwest to satisfy other anti-competitive concerns raised by the agency.

BP executives said last month that the Arco acquisition will mean about $1 billion in annual cash savings for the merged company, even after the Alaskan sale to Phillips.