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The Guardian (UK): Browne legacy takes a blow after new BP boss pledges change

· Hayward says oil group head office is overstaffed
· Indirect criticism of former chief executive

Terry Macalister
Wednesday July 25, 2007

Lord Browne’s legacy at BP was further tarnished yesterday when the new chief executive, Tony Hayward, delivered an unflattering verdict on the company he has inherited.

The man who took over from John Browne in May said the oil group was overstaffed at its London head office, the wider organisation was far too complex and he called for much more transparency around the business.

Distancing himself from the old regime, Mr Hayward said the operating performance of the business was “not good enough” and he wanted widespread changes, including a 25% cut in staff at the St James’s Square central office in a bid to restore the confidence of the company.

Reporting a 12% slump in underlying second quarter profits to $5.3bn (£2.5bn), Mr Hayward said he would be doing things differently from Lord Browne, the man dubbed the Sun King for his pre-eminent position at BP before his fall from grace after presiding over a string of safety problems in the US and then lying in court about his personal life.

“I’m going to be me; John was John,” explained Mr Hayward, who went on to pledge: “We can be more efficient, leaner and fitter by ensuring we have a common and consistent way of doing things, by reducing our overheads and doing a better job at managing our third-party spend.”

Most of the 100 staff being moved from the London head office were planners who would return to jobs as petroleum engineers in those parts of the world where BP has its main activities. BP will also recruit 1,500 engineers, reducing the company’s reliance on third-party contractors.

The BP chief executive said he was “absolutely accountable” for the delays to key projects such as Thunder Horse and Atlantis – their failure to come on stream on time helped cut second-quarter output by 5%. But he said he had learned from this and was putting more emphasis than ever on safety.

While insisting Lord Browne deserved credit for building, through takeovers such as Amoco and Arco, a business with the best possible asset base, there was a need to run these operations more dynamically, efficiently and safely, Mr Hayward said.

He dismissed suggestions that the “mega-mergers” had been a mistake but admitted the integration of these companies was still not complete while categorically denying there were any talks going on about an equity tie-up with Shell.

Mr Hayward avoided any direct criticism of his predecessor but outlined an “agenda for change” under which BP would draw a line under the problems of the past, including the Texas City fire, Alaskan pipeline fracture and propylene trading irregularities.

A new operating management system is being rolled out worldwide along with efforts to bring new production onstream and refineries back to full capacity.

Shares in BP were down 2% last night at 590p although the profit figures were slightly better than the City had anticipated. James Neale, a Citigroup oil analyst, believed the company needed to show a real operational recovery before the share price would recover its discount to rival operators.

Mr Hayward was upbeat about Russia, saying he had high hopes for the joint venture signed with the Russian state-owned Gazprom and he shrugged off the worsening political relationship between Downing Street and the Kremlin, insisting: “There is no evidence that the politics will get involved in the business.”

The BP boss was downbeat about what he described as the high-cost operating environment in the North Sea but said there were no plans to sell off that side of the business.,,2133915,00.html and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

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