A Republican congressman and a former Federal Trade Commission economist said yesterday that members of the Organization of Petroleum Exporting Countries may move in to acquire U.S. oil companies if the merger wave continues unabated.
"The recent acquisition of Santa Fe International Inc. by Kuwait Petroleum Corp. is a flying red carpet for the Saudis and other Arab emirates to enter into the bidding for domestic petroleum companies--say, Texaco or Exxon," said Rep. Clarence J. Brown (R-Ohio).
Brown has proposed legislation that would establish a moratorium on takeovers of domestic oil companies by major international oil companies to allow a study of the implications of such mergers. The recent debate over Mobil's proposed acquisition of Marathon Oil and predictions that success may mean a spate of takeovers of the "middle tier" of oil companies has produced a wave of concern in Congress about such combinations.
At a hearing conducted on the Brown bill yesterday by a House subcommittee on fossil and synthetic fuels, former Federal Trade Commission economist F. M. Scherer agreed that energy firms owned by foreign governments as well as by major private oil companies might be tempted by undervalued smaller oil companies.
"It's true; some OPEC countries--especially the less-populated OPEC countries--have tremendous amounts of cash flashing around," Scherer said. He noted that some of that money has flowed into investments in the United States. "Oil is an industry they know quite well. I would be quite surprised if they were not quite seriously looking at other investment opportunites in the U.S.," he said.
Scherer said that a country such as Saudi Arabia probably could acquire any company it wanted to but that this country would be sensitive to the political ramifications of a takeover of a company as large as Exxon.
Rep. James Collins (R-Tex.) said that he always has supported the major oil companies, which he said he views as well-managed. But he added, "I'll tell you, what they're doing now strikes me as a pint of foolishness."