Exhibit 10(f)


                        Amended by the Board of Directors 1/12/98





               ANNUAL INCENTIVE COMPENSATION PLAN
                               OF
                   PHILLIPS PETROLEUM COMPANY


Section 1.  Purpose and Establishment

    The purpose of the Annual Incentive Compensation Plan of
Phillips Petroleum Company (the "Plan") is to benefit the
shareholders of Phillips Petroleum Company by encouraging high
levels of performance by individuals whose performance is a key
element in achieving the Company's continued financial and
operational success and to enable the Company to recruit, reward,
retain and motivate all employees to work as a team to achieve
the Company's mission of being the top performer in each of our
businesses through the recognition and reward of such performance
on an annual basis when measured against predetermined annual
performance objectives.

    The Annual Incentive Compensation Plan of Phillips Petroleum
Company is established effective January 1, 1993.


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Section 2.  Definitions

    As used in this Plan:

    (a)  "Award" means the grant of cash or any other form of
         Share based or non-Share based Award granted pursuant to
         this Plan.

    (b)  "Award Agreement" means a written agreement between the
         Company and a Participant that sets forth the terms,
         conditions and any limitations applicable to an Award
         granted to the Participant.

    (c)  "Beneficiary" means a person or persons designated by a
         Participant to receive, in the event of death, any
         unpaid portion of an Award held by the Participant.  Any
         Participant may, subject to such limitations as may be
         prescribed by the Committee, designate one or more
         persons primarily or contingently as beneficiaries in
         writing upon forms supplied by and delivered to the
         Company, and may revoke such designations in writing.
         If a Participant fails effectively to designate a
         beneficiary, then the Award will be paid in the
         following order of priority:

              Surviving spouse


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              Surviving children in equal shares
              To the estate of the Participant.

    (d)  "Board" means the Board of Directors of Phillips
         Petroleum Company.

    (e)  "Code" means the Internal Revenue Code of 1986, as
         amended and in effect from time to time, or any
         successor statute.

    (f)  "Committee" means the Compensation Committee of the
         Board or any successor committee with substantially the
         same responsibilities.

    (g)  "Company" means Phillips Petroleum Company, a Delaware
         corporation, or any successor corporation.

    (h)  "Disability" shall mean the inability, in the opinion of
         the Company's group life insurance carrier, of a
         Participant, because of an injury or sickness, to work
         at a reasonable occupation which is available with the
         Company or at any gainful occupation which the
         Participant is or may become fitted.

    (i)  "Employee" means any individual who is a salaried


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         employee of the Company or any Participating Subsidiary.

    (j)  "Exchange Act" means the Securities Exchange Act of
         1934, as amended and in effect from time to time, or any
         successor statute.

    (k)  "Fair Market Value Per Share" in reference to the common
         stock of the Company means

         (i)  the average of the reported highest and lowest sale
              prices per share of such stock as reported on the
              composite tape of the New York Stock Exchange
              transactions (or such other reporting system as
              shall be selected by the Committee), on the
              relevant date; or

        (ii)  in the absence of reported sales on that date, the
              average of the reported highest and lowest sales
              prices per share on the last previous day for which
              there was a reported sale.

    (l)  "Participant" means any Employee who has been designated
         by the Committee to be eligible for an Award under this
         Plan.

    (m)  "Participating Subsidiary" means a subsidiary of the


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         Company, of which the Company beneficially owns,
         directly or indirectly, more than 50% of the aggregate
         voting power of all outstanding classes and series of
         stock, and one or more employees of which are
         Participants, or are eligible for Awards pursuant to the
         Plan.

    (n)  "Performance Measures" means the criteria which the
         Committee will use to evaluate the Company's
         performance.

    (o)  "Plan Year" means calendar year.

    (p)  "Restricted Stock" means shares of Stock which have
         certain restrictions attached to the ownership thereof.

    (q)  "Retirement" means termination of employment with the
         Company or a Participating Subsidiary which qualifies
         the Employee for Retirement as that term is defined in
         the Retirement Income Plan of Phillips Petroleum Company
         or of the applicable retirement plan of a Participating
         Subsidiary.

    (r)  "Rule 16b-3" has the meaning described in Section 12(c).

    (s)  "Section 16" means Section 16 of the Exchange Act or any
         successor regulation and the rules promulgated
         thereunder


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         as they may be amended from time to time.

    (t)  "Stock" mean shares of common stock of the Company, par
         value $1.25.

    (u)  "Stock Unit" means the right to receive a payment
         equivalent in value to one share of Stock on the date of
         payment.

Section 3.  Eligibility

    Awards may be granted only to Employees who are designated as
Participants from time to time by the Committee.  The Committee
shall determine which Employees shall be Participants, the types
of Awards to be made to Participants and the terms, conditions
and limitations applicable to the Awards.

Section 4.  Performance Measures

    As soon as practicable after the beginning of the year the
Committee shall determine the Performance Measures for the Plan
Year and shall advise Participants of the Performance Measures.
The Performance Measures may include corporate, group, business
unit and Staff objectives.  The objectives may include a
combination of financial and/or operational criteria and may be
measured


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solely against internal targets or in comparison to the
performance of an industry peer group or both.  The Committee
shall establish a threshold Performance Measure applicable to
overall financial performance of the Company which must be
achieved before Awards for the Plan Year will be granted.

Section 5.  Determination of Awards

    Following the completion of the Plan Year, the Committee will
review the Company's performance with respect to the Performance
Measures, and in its sole judgment, determine the amount and
manner of Awards to be granted to eligible Employees.  No Awards
will be granted if the threshold Performance Measure established
under Section 4 is not achieved.

Section 6.  Payment of Awards

    (a)  Each Award may be made at the discretion of the
         Committee either in cash, in Stock, in Restricted Stock,
         in Stock Units, or in another form as determined by the
         Committee and may be made partly in one form and partly
         in one or more other forms.  In the case of an Award in
         Stock, Restricted Stock, or Stock Units, the number
         shall be determined by using the Fair Market Value Per
         share of Stock on the date of the Award, provided,
         however, that


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         no Employee whose acquisition of Stock, Restricted
         Stock, Stock Units or other form of Award would be
         subject to the provisions of Section 16 of the Exchange
         Act shall be eligible to receive an Award otherwise than
         in cash, and the Committee shall grant Awards to such
         persons only in cash, unless prior to the grant of any
         such Award all action necessary to qualify such award
         for the exemption under Rule 16b-3 shall have been
         taken.

    (b)  The payment of any Award shall be subject to such
         obligations or conditions as the Committee may specify
         in making or recommending the Award, but Awards need not
         be evidenced by Award Agreements.

    (c)  Part or all of a cash Award may be deferred by a
         Participant under the terms of the Key Employee Deferred
         Compensation Plan of Phillips Petroleum Company or any
         successor plan thereto.

    (d)  Any Award payable in Stock or Restricted Stock may, in
         the discretion of the Committee, be paid part or all in
         cash, on each date on which payment in Stock or
         Restricted Stock would otherwise have been made, in an
         amount equal to the Fair Market Value per share of Stock
         on each such date, multiplied by the number of shares of


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         Stock or Restricted Stock which would otherwise have
         been paid on such date.

    (e)  Awards may be granted in Restricted Stock that is issued
         to a Participant and is subject to such terms,
         conditions and restrictions as the Committee deems
         appropriate, which may include restrictions upon the
         sale, assignment, transfer or other disposition of the
         Restricted Stock and the requirement of forfeiture of
         the Restricted Stock upon termination of employment
         under certain specified conditions.  The Committee may
         provide for the lapse of any such term or condition or
         waive any term or condition based on such factors or
         criteria as the Committee may determine.  The
         Participant shall have, with respect to awards of
         Restricted Stock, all of the rights of a shareholder of
         the Company, including the right to vote the Restricted
         Stock and the rights to receive any cash or stock
         dividend on such Stock.

    (f)  Awards may be granted in Stock Units that are subject to
         such terms and conditions as the Committee deems
         appropriate.  The number of Stock Units awarded with
         respect to any Award shall be the number determined by
         using the Fair Market Value per share of Stock on the
         date of the Award.  Any Award made in Stock Units may,
         in


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         the discretion or the recommendation of the Committee,
         be paid in shares of Stock on each date on which payment
         in cash would otherwise be made.

    (g)  In lieu of the foregoing forms of payment of Awards, the
         Committee may specify or recommend any other form of
         payment which it determines to be of substantially
         equivalent economic value to the cash value of the Award
         including, without limitation, forms involving payments
         to a trust or trusts for the benefit of one or more
         Participants.

    (h)  Each payment of an Award that is to be made in cash
         shall be from the general funds of the Company or the
         Participating Subsidiary making the payment.

    (i)  In the event the Participant resigns during the Plan
         Year or before Awards are paid for the Plan Year, no
         Awards shall be made to that Participant, provided, that
         the Committee may, in its sole discretion, determine
         that an Award shall be made with respect to the period
         of time during which the Participant was an Employee.

    (j)  In the event the Participant transfers to a non-
         participating subsidiary or otherwise becomes ineligible
         prior


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         to the end of the Plan Year, the Participant may remain
         a Participant for the purpose of all Awards which shall
         have been made prior to the Participant's transfer or
         prior to the Participant becoming ineligible or are to
         be made, but in such later case, only with respect to
         the period of time during which the Participant was an
         eligible Participant.

    (k)  In the event the Participant terminates employment by
         reason of Disability, the Participant may remain a
         Participant for the purpose of all Awards which shall
         have been made prior to the Participant's Disability or
         are to be made, but in such later case, only with
         respect to the period of time prior to the Disability.

    (l)  In the event the Participant terminates employment by
         Retirement, the Participant may remain a Participant for
         the purpose of all Awards which shall have been made
         prior to Retirement or are to be made, but in such later
         case, only with respect to the period of time during
         which the Participant was an Employee.

    (m)  In the event of the death of a Participant to whom an
         Award is to be or shall have been made, the Award or any
         portion thereof remaining unpaid may be paid to such


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         Participant's Beneficiary either in the manner in which
         payment would have been made had the Participant not
         died or in such other manner as may be determined by the
         Committee.

Section 7.  Administration

    (a)  The Plan and all Awards granted pursuant thereto shall
         be administered by the Committee so as to permit the
         Plan to comply with Rule 16b-3.  A majority of the
         members of the Committee shall constitute a quorum.  The
         vote of a majority of a quorum shall constitute action
         by the Committee.

    (b)  To the extent permitted by Section 12, the Committee is
         authorized to

         (i)  determine which Employees shall be Participants in
              the Plan and which form of Awards shall be granted
              to Participants,

        (ii)  establish, amend and rescind rules, regulations and
              guidelines relating to this Plan as it deems
              appropriate,


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       (iii)  interpret and administer this Plan, Awards and
              Award Agreements,

        (iv)  establish, modify and terminate terms and
              conditions of Award Agreements,

         (v)  grant waivers and accelerations of Plan, Award and
              Award Agreement restrictions and

        (vi)  take any other action necessary for the proper
              administration and operation of the Plan, all of
              which shall be executed in accordance with the
              objectives of this Program.

    (c)  The Committee may delegate to the officers or employees
         of the Company the authority to carry out any of its
         responsibilities under and described in this Plan, under
         such conditions or limitations as the Committee may
         establish, other than its authority with regard to
         Participants who are subject to Section 16.

    (d)  Determinations of the Committee and its designees shall
         be final, binding and conclusive on the Company, its
         Participating Subsidiaries, shareholders, Employees and
         Participants.  No member of the Committee or any of its


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         designees shall be personally liable for any action or
         determination made in good faith with respect to this
         Program, any Award, or any Award Agreement.

Section 8.  Adjustments Upon Changes in Capitalization

    Subject to any required action by the Company's shareholders,
in the event of a reorganization, recapitalization, stock split,
stock dividend, exchange of Stock, combination of Stock, merger,
consolidation or any other change in corporate structure of the
Company affecting the Stock, or in the event of a sale by the
Company of all or a significant part of its assets, or any
distribution to its shareholders other than a normal cash
dividend, the Committee may make appropriate adjustment in the
number, kind, price and value of Stock authorized by this Plan
and any adjustments to outstanding Awards as it determines
appropriate so as to prevent dilution or enlargement of rights.

Section 9.  Change of Control

(a) In the event of a Change of Control, all restrictions and
    other limitations applicable to any Restricted Stock shall
    lapse, and such Restricted Stock shall become free of all
    restrictions and become fully vested and transferable to the
    full extent of the original grant.


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(b) A "Change of Control" shall mean:
    (i)  The acquisition by any individual, entity or group
         (within the meaning of Section 13(d)(3) or 14(d)(2) of
         the Exchange Act (a "Person")) of beneficial ownership
         (within the meaning of Rule 13d-3 promulgated under the
         Exchange Act) of 20% or more of either (a) the then
         outstanding shares of common stock of the Company (the
         "Outstanding Company Common Stock") or (b) the combined
         voting power of the then outstanding voting securities
         of the Company entitled to vote generally in the
         election of directors (the "Outstanding Company Voting
         Securities"); provided, however, that for purposes of
         this subsection (i), the following acquisitions shall
         not constitute a Change of Control: (A) any acquisition
         directly from the Company, (B) any acquisition by the
         Company, (C) any acquisition by any employee benefit
         plan (or related trust) sponsored or maintained by the
         Company or any corporation controlled by the Company or
         (D) any acquisition pursuant to a transaction which
         complies with clauses (A), (B) and (C) of subsection
         (iii) of this Section 9(b); or

    (ii) Individuals who, as of January 12, 1998, constitute the
         Board (the "Incumbent Board") cease for any reason to


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         constitute at least a majority of the Board; provided,
         however, that any individual becoming a director
         subsequent to January 12, 1998, whose election, or
         nomination for election by the Company's shareholders,
         was approved by a vote of at least a majority of the
         directors then comprising the Incumbent Board shall be
         considered as though such individual were a member of
         the Incumbent Board, but excluding, for this purpose,
         any such individual whose initial assumption of office
         occurs as a result of an actual or threatened election
         contest with respect to the election or removal of
         directors or other actual or threatened solicitation of
         proxies or consents by or on behalf of a Person other
         than the Board; or

   (iii) Approval by the shareholders of the Company of a
         reorganization, merger or consolidation or sale or other
         disposition of all or substantially all of the assets of
         the Company or the acquisition of assets of another
         entity (a "Corporate Transaction"), in each case,
         unless, following such Corporate Transaction, (A) all or
         substantially all of the individuals and entities who
         were the beneficial owners, respectively, of the
         Outstanding Company Common Stock and Outstanding Company
         Voting Securities immediately prior to such Corporate
         Transaction beneficially own, directly or indirectly,
         more than 60% of, respectively, the then outstanding
         shares of common stock and the combined voting


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         power of the then outstanding voting securities entitled
         to vote generally in the election of directors, as the
         case may be, of the corporation resulting from such
         Corporate Transaction (including, without limitation, a
         corporation which as a result of such transaction owns
         the Company or all or substantially all of the Company's
         assets either directly or through one or more
         subsidiaries) in substantially the same proportions as
         their ownership, immediately prior to such Corporate
         Transaction of the Outstanding Company Common Stock and
         Outstanding Company Voting Securities, as the case may
         be, (B) no Person (excluding any employee benefit plan
         (or related trust) of the Company or such corporation
         resulting from such Corporate Transaction) beneficially
         own, directly or indirectly, 20% or more of,
         respectively, the then outstanding shares of common
         stock of the corporation resulting from such Corporate
         Transaction or the combined voting power of the then
         outstanding voting securities of such corporation except
         to the extent that such ownership existed prior to the
         Corporate Transaction and (C) at least a majority of the
         members of the board of directors of the corporation
         resulting from such Corporate Transaction were members
         of the Incumbent Board at the time of the execution of
         the initial agreement, or of the action of the Board,
         providing for such Corporate Transaction; or


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    (iv) Approval by the shareholders of the Company of a
         complete liquidation or dissolution of the Company.

Section 10.  Rights of Employees

    (a)  Status as an eligible Employee shall not be construed as
         a commitment that any Award will be made under the Plan
         to such eligible Employee or to eligible Employees
         generally.

    (b)  Nothing contained in the Plan (or in any other documents
         related to this Plan or to any Award) shall confer upon
         any Employee or Participant any right to continue in the
         employ or other service of the Company or constitute any
         contract or limit in any way the right of the Company to
         change such person's compensation or other benefits or
         to terminate the employment of such person with or
         without cause.

Section 11.  Compliance with Applicable Legal Requirements

    No certificate for Stock distributable pursuant to this Plan
shall be issued and delivered unless the issuance of such
certificate complies with all applicable legal requirements
including, without limitation, compliance with the provisions of
applicable


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state securities laws, the Securities Act of 1933, as amended
from time to time or any successor statute, the Exchange Act and
the requirements of the exchanges on which the Company's Stock
may, at the time, be listed.

Section 12. Amendments and Termination

    (a)  The Committee or the Board, as appropriate, may, insofar
         as permitted by law, from time to time, suspend or
         terminate this Plan or revise or amend it in any respect
         whatsoever; provided, however, unless the Committee or
         the Board, as appropriate, specifically otherwise
         provides, any revision or amendment that would cause
         this Plan to fail to comply with any requirement of
         applicable law, regulation or rule if such amendment
         were not approved by the shareholders of the Company
         shall not be effective unless and until the approval of
         the shareholders of the Company is obtained.

    (b)  Subject to the terms and conditions and within the
         limitations of this Plan, the Committee may amend,
         cancel, modify or extend outstanding Awards granted
         under this Plan, but no such action taken after a Change
         of Control, at the request of a third party seeking to
         effect a Change of Control, or otherwise in connection


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         with or in anticipation of a Change of Control, may
         adversely affect the rights of any Participant with
         respect to any outstanding award without such
         Participant's consent.

    (c)  This Plan is intended to comply with Rule 16b-3
         promulgated by the Securities and Exchange Commission as
         now in force or as such regulation or successor
         regulation shall be hereafter amended ("Rule 16b-3")
         with respect to Participants who are subject to Section
         16 of the Exchange Act.  Should the requirements of Rule
         16b-3 change, the Board or the Committee, as
         appropriate, may amend the program to comply with the
         requirements of the amended Rule 16b-3 or its successor
         provision or provisions.

Section 13.  Unfunded Plan

    The Plan shall be unfunded.  Neither the Company nor the
Board of Directors shall be required to segregate any assets that
may, at any time, be represented by Awards made pursuant to the
Plan.  Neither the Company, the Committee, nor the Board of
Directors shall be deemed to be a trustee of any amounts to be
paid under the Plan.


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Section 14.  Limits of Liability

    (a)  Any liability of the Company to any Participant with
         respect to an Award shall be based solely upon
         contracted obligations created by the Plan and the Award
         Agreement.

    (b)  Neither the Company nor any member of the Board of
         Directors or of the Committee, nor any person
         participating in any determination of any question under
         the Plan, or in the interpretation, administration or
         application of the Plan, shall have any liability to any
         party for any action taken or not taken, in good faith
         under the Plan.



2DP/026
01/08/98


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