CEO of BP to retire a year ahead of schedule

/ Source: The Associated Press

BP PLC said Friday that Chief Executive John Browne, whose initially lauded tenure at the head of the oil company was tarnished by a series of operational problems in recent months, will retire at the end of July — more than a year ahead of schedule.

Tony Hayward, the head of exploration and production, will take over the task of trying to repair the company's reputation with investors and the public following an Alaskan oil spill, a deadly Texas refinery blast and allegations of market manipulation in the United States.

Browne, whose future has been the subject of intense speculation, had announced in July that he would step down at the end of 2008.

"Last summer, John and I had agreed that he would stay as CEO until the end of 2008," said BP Chairman Peter Sutherland. "John decided that it would be in the company's 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."

Hayward, 49, who is currently in charge of the firm's exploration and production arm, will take over on Aug. 1, the company said.

Analysts said Hayward's appointment was no surprise, but that having a succession plan announced could help the company move forward.

"Tony's been standing in the wings for some time and he currently runs the largest division at BP, so the move is no surprise," said Brendan Wilders of Oriel Securities. He added that the appointment removes some uncertainty and "clears the air" but that Browne's departure will be "the end of an era."

Richard Hunter, head of U.K. equities at Hargreaves Lansdown stockbrokers, called 2006 "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."

Browne first joined the company in 1966 as an apprentice. During Browne's tenure as CEO, BP said, the company saw a fivefold increase in its market capitalization to $202.7 billion.

But BP said earlier this week that production in the fourth quarter is unlikely to change compared with the previous three months, following more than a year of declining output.

The company's series of troubles included the temporary closure of some operations at the Prudhoe Bay oil field in Alaska and delays to the opening of the key Thunder Horse platform in the Gulf of Mexico, as well as problems stemming from a 2005 explosion at a Texas refinery that killed 15 workers.

The company could be further marred with the upcoming publication of the Baker Report on the Texas City explosion and BP's refinery operations in the U.S.

An independent panel led by former Secretary of State James A. Baker is due to release a likely critical report on BP's U.S. refining operations. BP appointed the panel at the insistence of the U.S. Chemical Safety and Hazardous Investigations Board, which has lambasted the oil giant for poor operations.

"We clearly have important issues still to deal with which I am determined to address," Browne said in the statement. "I am pleased that Peter and I have been able to work together to develop a successor in Tony in whom I have every confidence."

BP expects to report figures for the full year on Feb. 6.