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Daily Telegraph: Has BP’s Hayward done more than repair the holes?

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Tony Hayward is viewed as ‘an operator’, a characteristic likely to endear him to the workers in BP’s front line

Last Updated: 1:18am GMT 04/02/2008

Tony Hayward has been busy in his first year running BP, but the City has yet to be convinced, writes Russell Hotten

When Tony Hayward was appointed chief executive of BP, one of his first decisions was to remove paintings of flowers and landscapes from the walls and replace them with pictures of workers and oil rigs. Real men, doing real jobs.
It wasn’t the only changes to the furniture at BP. An office suite designed by Viscount Linley was turned into a functional meeting room. Chairman Peter Sutherland moved his office down one floor, to be opposite Hayward. A physical separation that was emblematic of poor relations between Sutherland and Lord Browne of Madingley, Hayward’s predecessor.

Tomorrow Hayward, 50, will announce fourth-quarter results, marking the first anniversary of his appointment. And over the past year he’s done a lot more than re-arrange the office.

This time last year BP and Lord Browne’s world imploded in a series of headlines about his sex life. Hayward’s appointment was brought forward and, although he did not formally take up the job until the end of March, his influence and authority over BP began from the moment he was wheeled out to face analysts and the press at the company’s annual profits announcement.

“I get a sense from talking to those guys [at BP] that a huge amount has gone on behind the scenes,” said an analyst. “Tony doesn’t seem to have been out and about much talking to investors and people like me, but he’s been pretty active on trying to sort out the business. His problem is that none of this has made much impact on the share price and financials.”

At the end of January last year, the BP share price was 666p. On Friday it closed at 542p. BP has underperformed rival Royal Dutch Shell for more than two years and investors want that gap closed. “I give Tony another year to 18 months to show real signs of turnaround,” the analyst said.

But 2007 was always going to be a year of stabilisation rather than recovery. Hindsight reveals that Browne, feted as one of the greatest executives of his generation, in fact left BP in a mess. He earned his reputation by turning BP from a small, troubled company into a world player through acquisitions such as the purchase of Amoco. But having created a supertanker, Browne wasn’t so good at steering it.

Hayward’s job has been to put the ship back on course. He wins Brownie points for doing deals in Libya, and having the confidence to break with past policy by taking BP into Canada’s difficult, but potentially lucrative, oil sands sector. He also seems to have resolved without too much bloodshed the inevitable executive reshuffles following his appointment.

But his biggest change came last October when the “Forward Agenda” restructuring was announced. This was designed to strip out layers of management and focus more attention on frontline activities. “More action, less showbiz,” said one BP insider, in a reference to Browne’s tendency to spend more time at social and political events than at production sites.

Forward Agenda is about getting more engineers from behind their desks and into the field. But it is also about cutting costs. Although there have been pockets of redundancies announced, including 300 at operations in Aberdeen, it is thought that BP intends to reduce its 100,000-strong headcount by more than 5,000 by this time next year.

Despite the cull, BP staff do talk about the organisation being re-energised. “We are starting to feel that the important bits of the business are being focused on; that the top is more aligned with the bottom,” says one manager.

In October 2006, as the race to replace Browne was hotting up, a private email written by Hayward was leaked. It said: “We have a leadership style that probably is too directive and doesn’t listen sufficiently well. The top of the organisation doesn’t listen enough to what the bottom of the organisation is saying.” The email was seen as a criticism of Browne, and an attempt by Hayward to distance himself ahead of the avalanche of problems about to engulf BP.
Hayward’s supporters say the email was not just fine words. “He really is trying to change the culture. Of course it’s going to be a slow process, perhaps too slow for some in the City. But change is happening, definitely,” says one of Hayward’s fans.

Hayward is certainly a different character to his predecessor. Browne is an intellectual and visionary. One colleague of Hayward’s describes him as just a “practical bloke who likes his sport. Browne was a statesman. Hayward is an operator.” All this no doubt makes him more appealing to the chemical engineers and geologists on the front line.

But it means very little in the City, where concerns about BP’s financial performance remain. Earlier this month Merrill Lynch, Credit Suisse and Dresdner Kleinwort were among investment houses to downgrade their profit forecasts ahead of tomorrow’s results, citing fears about weaker margins in the refining and marketing business, disappointing production figures, and higher costs and taxes.

BP’s core problem – perhaps the only one that really matters – is that it is not finding and producing enough oil. Shutdowns, such as at the ill-fated Texas City refinery, and oil spillages in Alaska did immense reputational damage but also hit hard BP’s financial health. The scandal over Browne’s departure is fading, and the regulatory issues hanging over BP in the US are being dealt with.

Oil – that’s what really matters. And analysts say the wind is in Hayward’s favour. Peter Hitchens, analyst at Seymour Pierce, said: “The operational profile is looking brighter as the group starts to bring on-stream some of its major projects in order to get the production profile moving higher.”

Production at the Atlantis Field, in the Gulf of Mexico, will be ramped up in 2008, and output at fields off Trinidad and Tobago have already started. Long-awaited production from Thunderhouse in the Gulf of Mexico and from fields in Azerbaijan are also due to start in 2008.

These are the factors that will determine if Hayward has re-arranged the furniture, or repaired holes in the ship. and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

1 Comment on “Daily Telegraph: Has BP’s Hayward done more than repair the holes?”

  1. #1 Deliver Flowers
    on Feb 9th, 2008 at 07:04

    Deliver Flowers…

    The period of perpetually uncovering convincing impressions having to do with this affair have ended….

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