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The Observer: Bosses must win or walk the plank

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.

The above are extracts relevant to BP and Shell. For the complete article go to…,,1980297,00.html

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