The real villain of BP

26 June 2010

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John Browne transformed BP into the second biggest oil company in the world, says Tom Bower. But his obsession with cutting costs came at a terrible price

At a critical moment, BP’s reputation in America was on a knife-edge. Oil prices were rising and Browne spotted the dangerous defect in the debate about the world’s oil supplies. ‘Peak oilists’ were propagandising that the world had already consumed over half of the original two trillion barrels of oil and that low-cost oil had been permanently depleted. Their arguments were based on bogus statistics and bad science. ExxonMobil’s studies suggest that over 11 trillion barrels of oil remained under the ground. The problem, Browne knew, was access to easy oil. Nations with huge reserves such as Russia, Venezuela and Mexico were denying western oil companies access in the hope that oil shortages would push prices up and, by producing less oil, they could earn more. To counter that greed, Browne chased deep off-shore drilling six miles beneath the sea bed in the Gulf at $100 million a throw, knowing that most attempts produced dry holes. But BP now lacked engineers who could scrutinise subcontractors. That poisoned legacy was Hayward’s inheritance. It has lead directly to the current catastrophe.

Appointed because no other suitable candidate had survived Browne’s management changes, Hayward was a good geologist but a weak leader. In 2008, his political naiveté was exploited by the oligarchs who were BP’s partners in Russia. Possibly to protect himself from being second-guessed as he reformed BP’s culture, Hayward insisted on the appointment of an insignificant chairman rather than a British candidate like Dick Olver, the chairman of BAE, or Paul Skinner of Rio Tinto. The botched compromise was Carl-Henric Svanberg, who tolerated Hayward’s snail-pace reform of Browne’s dangerous legacy. BP’s shareholders are now paying the price of Browne’s failed ambitions.

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Al

June 27th, 2010 6:27pm Report this comment

There are so many mistakes in this article it's hard to know where to begin. Five minutes googling reveals:
John Manzoni trained as a petroleum engineer and is not an accountant.
Thunder Horse tilting had absolutely nothing to do with any equipment on the seabed - it's a floating platform.
Cost-cutting orders of Browne's turtles?? They are "Executive Assistants" and cetainly don't issue orders.
Please let's have some genuine, well-researched journalism.

JohnAnt

June 30th, 2010 9:04pm Report this comment

Excellent article.
Interesting to read about BP's loss of engineering memory through sacking in-house experts and farming out projects and insufficiently supervising them.
So many organizations have gone this route...Suddenly people wake up when it's too late: the process is irreversible.
There's an important bit of the H&S regs that most people who do the courses conveniently forget - about ultimate supervisory responsibility.

Ashton Emery

July 27th, 2010 10:28pm Report this comment

Have only just read Tom Bower's article. (We're a bit behind in South Africa.) I'm afraid that Tom isn't quite the investigative journalist that he pretends to be. BP pioneered deep sea drilling and mistakes were bound to happen and can't be blamed on previous mangement or Hayward.

Tom once wrote a biography of Al Fayed that was absurdly biased. He was supposed to investigate the truth but his description of Henri Paul as a drunk was totally out of line, although in line with all official views. The Ritz hotel video recordings don't lie. I can't balance, when sober, to tie my shoelaces as perfectly as Henri Paul did before he drove the car in which Dodi Fayed and Princess Diana died. Paul was not umpteen times over the drink limit as was repeatedly 'found'.

BP, Browne and Hayward are victims of a president and Congressmen who are seeking votes. Tom could do better as my school reports used to say. He plays to the gallery rather than doing the proper research.

Yours,

Ashton Emery (Dr)

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