BP chief reveals early departure from oil giant

Lord Browne of Madingley shocked the City tonight when he said he will stand down as chief executive of oil giant BP in July.

The 58-year-old was due to remain in charge of the troubled firm until the end of next year but will be replaced by Tony Hayward, BP head of exploration and production, on August 1.

It brings to an end a 40-year career at BP for Lord Browne, who has been regularly feted as the leading businessman of his generation.

However, he has come under fire recently over a catalogue of disasters at BP, including the deaths of 15 workers in a fire at its Texas City refinery in 2005.

There have also been delays to the opening of the key Thunder Horse platform in the Gulf of Mexico, while an oil spill saw 270,000 gallons of crude leak into Alaska’s Prudhoe Bay last March.

The reputations of Lord Browne and BP could be further savaged next week when the Baker Report on Texas City and BP’s refinery operations in the US is published.

Lord Browne, a close associate of Tony Blair, said it was “a privilege” to have run BP and insisted his job was not over yet.

“We clearly have important issues still to deal with which I am determined to address,” he said.

Richard Hunter, head of UK equities at Hargreaves Lansdown stockbrokers, said the early departure of Lord Browne allowed the firm to “draw a line in the sand”.

Shares rallied in the final 20 minutes of trading following the announcement and closed up almost 2% or 9.5p at 546.5p, having spent much of the day on the back foot.

Mr Hunter said: “2006 was something of an annus horribilis for BP. Whilst it was previously known that Lord Browne would be departing in 2008, clearly this move may allow BP to draw a line in the sand and concentrate on the various operational problems it is currently facing.”

Lord Browne joined BP as an apprentice in 1966 and worked his way up the company until he was made chief executive in 1995.

He earned £3.3m (€4.99m) last year after his annual salary of £1.5m (€2.3m) was boosted by bonuses. He is also entitled to one of Britain’s biggest pension pots of around £1m (€2.3m) a year, as well as millions of pounds worth of share options.

BP chairman Peter Sutherland said: “John Browne is the greatest British businessman of his generation and has transformed BP into one of the biggest energy groups in the world.

“His performance over the past 12 years has been extraordinary, which is no doubt why he has constantly been named by his fellow chief executives as the most impressive businessman in Britain.

“His vision, intellect, leadership and skill have been a wonder to behold and he will be a difficult act to follow.”

Speculation over the succession at BP intensified over the summer amid rumours of a row between Lord Browne and Mr Sutherland.

It was thought that Mr Sutherland wanted his chief executive to leave when he hit 60 in February 2008, while Lord Browne was adamant he would stay on.

In July, Lord Browne denied reports of the boardroom rift and said he would remain at the helm until New Year’s Eve 2008.

His successor was due to be announced this summer and take over in January 2009 but BP brought the date forward shortly before the stock market closed tonight and said Mr Hayward would take charge in August.

Mr Sutherland said: “Last summer, John and I agreed that he would stay as chief executive until the end of 2008.

“John decided that it would be in the company’s best interest to name a successor now in order to provide an orderly transition.

“Having made that decision, which the board fully supports, we came to the conclusion that a six-month handover would be more appropriate than 18 months.”