There will be bruises as predators, politicians and regulators get stuck in. Chief executives will have to rise to the challenge if they want to keep their jobs – and their huge salaries. Oliver Morgan reports
Sunday December 31, 2006
Politics are likely to play a big role in the last full year that Lord Browne spends at the top of oil group BP. Much of BP’s recent growth has come from its 50:50 joint venture with Russian company TNK. However, earlier this month, BP’s rival Shell was forced to cede control of its joint venture to develop the massive Sakhalin-2 oil and gas field off Russia’s east coast to Gazprom after pressure from the Kremlin.
Similar pressure is now being applied to BP, which faces investigation into a licence to develop a large oil field in Siberia. Experts believe this is the prelude to a move by Gazprom to buy out TNK and force BP to become a minority partner.
There are other questions for BP. Who will succeed Browne, due to leave by the end of 2008? There are several internal candidates to replace him – the front runner is head of exploration and production Tony Hayward.
Browne has headed the company for more than a decade, transforming it through a series of deals. Only recently has his reputation been tarnished over allegations linked with safety. Could he seek to bury all that with a last mega-deal – with Shell, as was rumoured earlier in the year?
As for Gazprom, which starts 2007 as it did 2006 by threatening to cut off a neighbour over a price dispute (in 2006 it was Ukraine, now it is Belarus), UK interest will focus on whether it bids for Centrica, owner of British Gas. Centrica is one of a number of big British names that go into 2007 as bid or breakup targets.
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