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Relationships based on respect.

Relationships Based On Respect

ARCO's view of the world beyond the borders of the United States has changed. For years, we were mainly a domestic company, with oil and gas production in a limited number of foreign locations. Today, we look with increasing interest to prospects around the globe, recognizing that we must succeed on an international scale or give up the idea of being a major player in the markets of the 1990s and the next century.

The reason for that change of viewpoint is obvious in the oil and gas business. While there are still prospects to be explored in the U.S., especially Alaska, most good, domestic opportunities are being put off limits as a consequence of legislation or environmental opposition. Consequently, we are looking at drilling prospects outside of the U.S. in a range of areas including South America, the North Sea, Europe, Africa, the Mideast, East Asia, and the South Pacific.

Every well we drill won't be commercially successful, of course, but those that hit will bring major benefit not only to ARCO and its investors but the host countries as well. Energy growth is a necessary precondition for overall economic growth, as we've seen in Indonesia, one of ARCO's key producing countries. Oil and gas revenues there have helped diversify and strengthen the economy while yielding important returns for ARCO for more than a quarter-century.

Our experiences in Indonesia and the United Kingdom encourage us to do more in foreign lands. But our enthusiasm can't blind us to the truth that exploring overseas often adds an unhealthy measure of political uncertainty to the normal financial risk of the business. Indonesia and the U.K. are winners for us because their governments understand the chances foreign oil companies take and are willing to permit companies like ARCO to obtain a reasonable return on our investments.

Other countries don't feel the same way. Looking around the world, we find that wells are not drilled, exploration programs are not undertaken, and discoveries are not made because contracts fail to compensate for risk. As we negotiate, we make the point again and again: Be fair, be reasonable - we'll do the rest.

Oil and gas is not all we do overseas: We produce and sell petrochemicals in Europe and the Far East; our Australian coal mines are among the largest in

that country, exporting steam and metallurgical coal chiefly to Japan; and our chain of am/pm minimarkets, started in the U.S. 10 years ago to increase our dealers' income, now stretches through major East Asian and European cities. This range of foreign business gives us a healthy income, which we intend to expand manyfold in the '90s. But, in the final analysis, profit is no more the sole measure of success in our foreign operations than it is at home.

Wherever it's sought and found, true business success blends financial and social achievement. That means that wherever the ARCO flag is flown, we involve ourselves in the local society as committed members of the community, not carpetbaggers. As we reap economic gain, we plow something back to invigorate, strengthen, and protect the society that is benefitting us. We feel that commitment deeply.

In Indonesia, for example, ARCO has been a major player in the oil and gas industry since the pioneer days of the mid-'60s. We have discovered over 1.5 billion barrels of oil, produced about 800 million, and are ready to market two trillion cubic feet of natural gas we've found off the coast of Bali.

What does it mean to the people of Indonesia? Obviously, at the head of the list are the economic benefits. But Indonesian nationals are also receiving sophisticated business training. ARCO, like every major oil company, recognizes that our overseas operations eventually will be run by local people. And, to cite a specific benefit, gas we found will mean cheap electricity for local manufacturing, and thousands of new jobs.

Getting down to it, it doesn't make as much difference where you do business as how you do it. It's clearly important to learn the language and mores, meet the key players, and explore the interests you share. But it's vital to construct relationships based on respect and the long-term interests of both the investing company and the host country. American business in the '90s will carry its capital, technology, and values around the world. If we apply them as we do at home, the bottom line is predictable: Fairness and honesty will beget like treatment to the benefit of all.
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Title Annotation:Special Section: Being a Global Leader; views of Lodwrick M. Cook, CEO of Atlantic Richfield Inc.
Publication:Directors & Boards
Date:Sep 22, 1991
Previous Article:The age of alignment.
Next Article:Become sharper, smarter players.

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