BP chief seeks swifter change

Financial Times
March 14, 2008

http://www.ft.com/cms/s/0/de230c4a-f14b-11dc-a91a-0000779fd2ac.html?nclick_check=1

By Sheila McNulty in Houston
Published: March 14 2008 01:02 |
Last updated: March 14 2008 01:02

Tony Hayward, BP’s chief executive, has said the oil group needs to reinvent itself in as radical a way as it did in the 1970s and 1990s, according to a summary of his remarks posted on the company’s intranet.

Mr Hayward told a meeting of group leaders in the US: “BP has reinvented itself before in the 1970s and early 1990s. It needs to reinvent itself again in 2008.”

A synopsis of his remarks at a closed meeting in Phoenix, Arizona, earlier this week was published on OneBP, the closed, corporate intranet for all BP. The Financial Times has obtained a copy.

The meeting was billed as “the first time in modern BP history that all group leaders have gathered together in a single meeting”.

The “act now” message Mr Hayward put forward has been a common theme since he took over last year from Lord Browne, following serious safety lapses in the company’s US operations.

The urgency of his words to his leadership team underlines how serious the problems are confronting the oil group.

The OneBP report said Mr Hayward delivered a “hard-hitting address”, setting out BP’s current gap with competitors, as he “spelled out the consequences if BP fails to urgently address its current performance shortfalls”. The report did not specify what those consequences would be.

It went on to say that he urged leaders to “increase the intensity of changes under way” and challenged them to look for immediate steps to simplify or stop activity.

BP said: “We don’t comment in the press on what is said at internal meetings.”

BP continues to face problems in its US operations, where fatal accidents at its Texas City refinery led government investigators this year to open a formal inquiry into operations at the site.

BP insists it has improved safety at the facility, following a 2005 blast that killed 15 people and injured hundreds in and around the refinery, damaging the company’s reputation and leading to protracted litigation.

Mr Hayward told the company’s leaders the agenda he has set was the “biggest thing BP has taken on in the last 20 years’’, intended to transform the company fundamentally and push it back at the forefront of the industry.

That includes simplifying how the company is structured and operated and ensuring that resources are shifted to the front line, with operating managers freed from corporate bureaucracy.

Mr Hayward said that confidence internally and externally with BP’s investors could only be won by delivering on short-term targets for revenue restoration, reducing complexity and cost reduction, while fundamentally changing corporate behaviours.

“Given the scale of the turnround, this won’t be easy, and there are a lot of tough decisions that need to be taken,’’ Mr Hayward was quoted as saying.

~ by fredfelleman on March 14, 2008.

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