Trading Statement

BP AMOCO PLC
15 July 1999


BP AMOCO TO SELL $10 BILLION OF ASSETS AND BOOST
GROWTH CAPEX TO $26 BILLION OVER THREE YEARS

BP Amoco today announced that it plans to lop $4 billion off its annual costs
worldwide, to sell assets of $10 billion and to boost capital spending to a
total of $26 billion over the three years to the end of 2001.

Unveiling new three-year targets for the merged group to financial analysts in
London, chief executive Sir John Browne said these actions were aimed at
adding up to six percentage points to BP Amoco's return on capital by the end
of the period.

'Clearly, absolute profit levels will be determined by actual trading
conditions,' Browne said. 'But this very significant improvement in underlying
performance is a target we now believe we can deliver.'

Browne told analysts that the integration of BP and Amoco was now essentially
complete, with synergies from the merger likely to be running at the promised
annual rate of $2 billion before the end of 1999, over a year ahead of
schedule.

Following six months of intensive work since the merger closed in December,
new targets were also now in place for the first three years of the new
company, including this year, designed to take BP Amoco on a powerful growth
curve into the next century. Outlining four of the principal targets, Browne
said:

'First, we will continue to improve the efficiency of our operations, with a
target to cut our costs by some $4 billion by the end of 2001, a reduction of
more than 20 per cent from our 1998 base. We also intend to high-grade the
portfolio with $10 billion of disposals.

'Second, we plan to invest for growth. Based on mid-cycle assumptions, we aim
to spend some $26 billion over the three years to end-2001, with our capital
employed growing in total by between two and five per cent.

'Third, we aim to maintain our gearing within a band of around 25 per cent to
30 per cent and to maintain our dividend policy of paying out 50 per cent of
underlying mid-cycle earnings.

'Fourth, we intend to enhance our returns on capital employed by between five
percentage points at the bottom of the cycle and six percentage points at mid-xploration chief executive Richard Olver, Oil chief executive Doug Ford and
Chemicals chief executive Bryan Sanderson - Browne disclosed that the company
had made major new oil discoveries in the Gulf of Mexico and offshore Angola.

'Our Crazy Horse well indicates a discovery of at least one billion barrels,
the biggest-ever find in the Gulf of Mexico. BP Amoco holds a 75 per cent
interest in the area concerned and we have more wells to drill. Our net
volumes in the Gulf now total some three billion barrels and we could see
production there rise to 800,000 barrels a day over the next decade.

'Our Plutonio well offshore Angola is ang the Caspian, and production could be r
cent a year later in the first decade of the next century.'

Browne said that, with these and other discoveries not yet booked, 'BP Amoco
has sufficient resources available not only to grow production but to continue
to replace that growing production for at least the next ten years.'

Rationalisation of the production portfolio would keep upstream output broadly
level between now and the end of 2001, he said.

'But beyond that, there is strong growth potential for oil production,
particularly from the Gulf of Mexico, from Angola and from other contributors,
including the Caspian, and production could be rising by as much as eight per
cent a year later in the first decade of the next century.'

In gas, where the company has set up a separate marketing and power business,
Browne said existing assets in the UK North Sea, Australia's North West Shelf
and North America could sustain production of some 4.5 billion cubic feet a
day over the next ten years. But with additional growing gas interests in
areas such as Trinidad and Algeria, and growing consumer demand for cleaner
fuels, he expected gas output to increase steadily over the same period.

Browne said BP Amoco would continue to plan on the basis of a low oil price,
progressively driving down supply costs to ensure that the group was robust at
$11 a barrel.

'Since 1989 we've reduced our supply costs by five per cent a year in real
terms.  Our objective is now to reduce those costs by a further $2 a barrel by
the end of 2001, bringing Amoco costs down to the BP level but also continuing
to reduce the BP level itself.

'With porduction of around one billion barrels of oil a year, a $2 reduction
would mean an improvement of some $2 billion.  In contrast to downstream cost
reductions, which are partially competed away, upstream cost reductions tend
to go straight to the bottom line.'

Browne said capital spending for BP Amoco this year would be around $7 billion
and disposals some $2 billion.

Of the $4 billion cost reduction target for the three years to end-2001, he said
he expected some $2.2 billion to come from the upstream business, $1.4 billion
from refining and marketing and $400 million from petrochemicals.

Of the planned $10 billion disposals, some $4 billion would come from
exploration and production, including the company's Canadian oil interests
which were already on the market and its 64 per cent stake in Altura Energy,
an oil and gas producer in Texas and New Mexico.

Over $3 billion would come from the sale of downstream assets, with the
biggest single element from refining where Browne said the group had made a
strategic decision to reduce its global coverage significantly.

Browne said: 'With worldwide refining capacity continuing to grow faster than
demand, our expectation is that the global refining margin will average little
more than $1 a barrel over the medium term.

'Our aim,therefore, is to reduce our refining coverage by around a third, which
means that the ratio between our own refining supply and the volumes we market
will fall to between 60 and 70 percent from today's level of 90 per cent.'

Browne said the first disposal would be the 250,000 barrels-a-day Alliance
Refinery in Louisiana.

Chemicals disposals over the three-year period were expected to total some 
$2.5 billion, as the group exited low margin, low growth activities. 'In 
chemicals, we  aim to add value by focusing our manufacturing predominantly on
'ideal' sites such as Grangemouth in Scotland where we can integrate our
activities with our own hydrocarbon base and minimise the production of lower
value byproducts,' Browne said.

'Creating a limited network of manufacturing sites, many integrated with
upstream and downstream assets, will reduce fixed and variable costs per
tonne. In total we expect unit costs in our chemical business to fall by 25
per cent over the three-year period.

'Our aim is to have an overall chemicals portfolio biased to products such as
portfolio, particularly in gas and the US downstream. It will also give us
great new opportunities in Alaska and further potential for future growth in
Asia.

Browne said that after the $10 billion of divestments, the group expected to see
gas production growing consistently by some five per cent a year, oil production
flat to rising slightly for three years and then growing by eight per cent a
year, marketing sales growing by some five per cent a year and chemicals sales
by six per cent a year.

Browne told analysts that all the new targets excluded any potential benefit
from the pending merger with ARCO.  'While ARCO will represent only 15 per cent
of the total market capitalisation of BP Amoco, it will strengthen the
portfolio, particularly in gas and the US downstream.  It will also give us
great new opportunities in Alaska and further potential for future growth in
Asia.

'As we said when we announced the transaction in April, we expect to realise
$1 billion of pre-tax cost-savings from synergies in the first two years. The
transaction is now being examined by the relevant authorities and we aim to
close the deal later this year.'

Browne disclosed that the company will hold an EGM to seek the approval of BP
Amoco shareholders to the ARCO merger on September 1.

'That meeting will also be asked to approve one other step. To improve the
liquidity of the market in our shares and to bring us into line with our peers
in the US, we intend to seek shareholder approval for a share split - creating
one new share for each existing share and, consequently, one new ADR for each
existing ADR.'

In conclusion, Browne said: 'In the six months since the merger with Amoco, it
is clear that we have made enormous strides in creating a new company.  We have
integrated two corporations, enhancing the best of both, realising synergies and
savings, achieving a new scale and reach.

'Ours is now an organisation of high motivation, distinctive assets, clear goals
and focused performance - all contributing to formidable growth in shareholder
value.'