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BP ‘missed the boat’ on Shell mega-merger, reveals Browne home

• BP board in Williamsburg squashed proposals in 2004
• Ex chief claims merger could have been worth $9bn a year
• Tie-up with Yukos rejected after ‘untoward’ encounter with Khodorkovsky

Terry Macalister
Friday 5 February 2010 16.24 GMT

Lord Browne claims the merger proposals had the support of his team, which would have included current BP chief executive Tony Hayward (above) who was then head of exploration. Photograph: Suzanne Plunkett/Reuters

Lord Browne took BP to the brink of a mega-merger with Royal Dutch Shell six years ago only to be thwarted at the last minute by opposition from a handful of his own board members, the former chief executive has claimed.

“We missed the boat” argues Browne in his autobiography, which is published on Monday.

The Shell deal would have involved selling off the whole of BP’s downstream refining business – an operation that is currently struggling to make money.

“We estimated that a merger could create synergies of around $9bn [£5.8bn] a year in three to five years’ time. It also would have been a significant boost to the oil industry outside of the US,” he argues in Beyond Business, published by Weidenfeld & Nicolson.

There was much speculation at the time that BP and Shell had held casual talks but the oil companies denied it had been anything other than early soundings that quickly led nowhere.

But Browne, who stepped down in 2007 in favour of his head of exploration Tony Hayward, planned to put detailed proposals to the BP board at a meeting in Williamsburg, Virginia. Browne claims he had the support of his own executive team, which would have included Hayward.

“On the plane there I knew the answer even before the meeting started. The sentiment was ‘why rock the boat’. The Shell merger was not discussed. It was not going to be done and that was that… In the end we did not rock the boat; we missed it,” he says.

Browne also revealed how he also thought about buying into Yukos rather than TNK as his entrance point to Russia. But he claims a meeting at his house in Cambridge with the now-imprisoned Yukos boss Mikhail Khodorkovsky put him off because the Russian talked about his political influence in that country. Browne said: “It is easy to say this in hindsight but there was something untoward about his approach.”


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