06-02-01 Although Phillips Petroleum's acquisition of Tosco will initially increase its exposure to refining and marketing, Phillips still plans to emphasize its exploration and production assets over the long term, CEO James Mulva has told. Through asset rationalization and future investment, Phillips' refining and marketing operations will eventually drop to 30 to 40 % of Phillips total assets, Mulva said.

Some industry observers have questioned the acquisition, which they view as a change in strategy. For the past four years, Phillips has attempted to sell or to find a joint venture partner for its refining and marketing operations, but several attempts to strike a deal failed. The process of trying to structure a refining and marketing joint venture revealed how difficult it is to form a successful downstream venture, Mulva said.
But Mulva said an integrated oil company must have some access to the downstream. He said he expects the acquisition of Tosco to improve Phillips' relationship with international players in the oil market, adding it would also improve the company's access to exploration and production projects.