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BP's Problems Cost CEO His Job
The Financial Times interpreted Hayward's remark as a shot at Browne in a bid for the top job, but Hayward later protested that his comments weren't directed at Browne and were in line with the company's frank self-criticism in the face of its recent missteps. Browne and other BP executives have repeatedly apologized to workers, shareholders and customers.
How much of BP's recent trouble can be blamed on Browne remains a matter of dispute. One theory is that while Browne was excelling at making deals -- $62 billion to buy Amoco in 1998, $32 billion to buy Arco in 2000, several billion more to buy into Russia -- problems were festering at the operational level.
  John Browne has headed BP since 1995. He will be succeeded by production chief Tony Hayward. (By Tony Gutierrez -- Associated Press) |
Some blame Browne for trying to trim costs in assets acquired with the mergers. The Alaska pipelines weren't cleaned for 14 years, half of that time under Arco and half after they were acquired by BP. The Texas City refinery, inherited from Amoco, had a patchy safety record that lawyers for injured workers and survivors of the employees killed blame on cost cutting and bad management. It isn't clear yet what caused metal parts to fail on the company's big Thunder Horse platform in the Gulf of Mexico.
"The oil and gas industry is a risk industry," said Lew Watts, president of the consulting firm PFC Energy and a former Shell executive. "People take risks with regard to exploration. They shouldn't be taking risks on safety. I don't believe in bad luck."
More harsh criticism may be on the way this month when a panel led by former U.S. secretary of state James A. Baker III delivers a study of safety standards at BP's five U.S. refineries.
"We have a management style that has made a virtue out of doing more for less," Hayward said in Houston last month. "The mantra of more-for-less says that we can get 100 percent of the task completed with 90 percent of the resources, which in some senses is okay and might work. But it needs to be deployed with great judgment and wisdom. When it isn't, you run into trouble."
Much of that trouble has come in Hayward's areas. Recently BP announced that its oil and gas production volume fell about 2.3 percent last year.
"It's easy to be a bit downbeat and downhearted if all you do is read the press in the U.S.," Hayward said in Houston. "The reality is that there's an enormous amount of great stuff going on all over the place in BP. The firm's in great shape."
As for Browne, he has vowed to keep working. Browne is a director at Goldman Sachs and Intel and a friend of top officials in Britian's ruling Labor Party, and people who know him say he won't have any trouble keeping busy.
