There may not be room for more mega - mergers in the private sector. The next move is more likely to be on the part of national governments and state-owned oil companies looking for opportunities to improve efficiency and value creation,’ says BP Amoco Norge general manager Greg Coleman.

When the merger between BP and Amoco was finalised a year ago, Coleman took over as general manager of the companys Norwegian business unit. He participated actively in the merger process as executive assistant to BPs chief executive officer Sir John Browne. At 45, he has more than ten years experience of working for each of the two former companies, BP and Amoco.

Managed by the state
China, Russia and Iraq are major players in the international oil industry, explains Coleman, as are Mexico, Argentina and Brazil. All these are significant producers, with enormous resources. However, their most important shared feature is that the oil business in these countries is mainly owned and managed by state-owned companies, with very limited opportunities for foreign companies to participate.

But this cannot and will not last. The state-owned companies need competition in order to further develop their technology and efficiently utilise their resources. They also need capital in order to realise major, high-cost projects. International players in the oil business both oil companies and contractors have the most up-to-date expertise for further developing technology at feasible cost.

The ability to participate in these developments and the opportunity to be present in such countries will separate the winners from the losers in terms of future opportunities in the oil industry.

The pendulum swings
Since the BP/Amoco merger, other mergers and alliances have also been created. Belgiums Petro Fina and the two French oil companies, Elf and Total, for example, have become one company. Esso has grown even larger through its amalgamation with Mobil.

Its true that we started early, is Colemans comment on these significant structural changes to the major oil companies. But changes take place all the time they always have and always will. Next time, the pendulum may swing in the opposite direction. Companies may well split into smaller units once more.

The fact that the two former companies have become one is clearly visible in Norways oil capital, Stavanger. BPs building, which was full of BP employees a few years ago, is now only partly filled by BP Amoco. Statoil rents half the building, while another almost as big has stood empty in Stavanger city centre since Amoco moved out.

Both the two long-established companies brought strongly anchored and different cultures with them to the new company, which has been a challenge for the respective staff and management teams. A new, common culture must be developed, and this takes time. Ahead lie challenges for each, following over 200 job losses. From the outside, the two cultures that are now being merged into one have always appeared different BPs decision-oriented culture versus Amocos culture of consensus.

Quality more important than price
The new company also represents a challenge for the two companies former contractors. Says Coleman, Were cutting back on our lists of suppliers. We cannot maintain relationships with all our previous contractors. The best will remain. Quality is more important than price, and safety is a prerequisite for them being considered at all. When awarding contracts, quality will count for 80% and price for 20%.

Contractors which can refer to previous results and prove that they give priority to safety, use their best people and can cooperate well and closely with BP Amoco will be given preference.

I expect that between 60-80% of BP Amocos tasks will continue to be carried out by people other than our own employees, explains Coleman. I predict that many of these tasks will be carried out in areas we are not in today such as China and Mexico. The challenges for both BP Amoco and its contractors lie not in new, imminent company mergers, but in being there and applying their expertise to these new areas where its happening and when its happening.