Tony Hayward, BP

If BP's Tony Hayward carries on like this, the board may have to revive that long-abandoned designation of chief-executive-for-life

Born: Reading, UK
Education: Aston University, Birmingham, and Edinburgh University
Career: 1982 Joined BP, working mainly for BP Exploration. 1990 Appointed executive assistant to CEO. 1995 President of BP’s Venezuelan operations. 1997 Director of BP Exploration. 2000 BP group treasurer. 2003 CEO of exploration and production. 2007 Chief Executive and Executive Director BP

In two and a half tumultous years in the top job at the global energy giant, he has made a habit of delivering the right kind of surprises. Starting in mid-2007, he shock-proofed the group’s finances before the financial crisis hit, cut costs by ever-growing amounts each year, reduced the payroll by 6,500 employees as part of a general streamlining of the sprawling organisation while still managing to post “stellar” profits, as institutional investors described the latest figures.

BP has announced underlying profits of $4.7bn for the third quarter of 2009, up 60 percent over the previous quarter. A company-wide programme of financial efficiency will produce savings in cash costs of $4bn, twice the estimate at the start of 2009. And all this happened in a period when oil hit $150 a barrel, collapsed to $35 five months later, and has since bounced back to around $70.

Overall, the impression is of a BP that has upped its game across the entire company. Just one measure, albeit an important one, is refinery availability. A measure of operational efficiency, it shows that refineries were available for more than 94 percent of the last quarter, up six percent on 2008, as a result of reductions in costly downtime.

Hayward has even found a solution to the troubled TNK-BP partnership in Russia through an agreement earlier this year that a Russian-speaker succeed BP’s appointments.

Still only 51, Hayward is clearly heading for a stellar future himself on this his form so far. As Thomas Pearmain, analyst at HIS Global Insight, says: “He has put his stamp on the company.”

However BP is by no means out of the woods. In the United States, where BP earns nearly half its revenue, it has had one battle after another, all of which Hayward has inherited. There’s on-going dispute with US authorities over alleged “systemic safety issues” at the Texas City refinery in Alaska where 15 died and 170 were injured in an explosion four years ago. (BP insists it’s been following the rule book since the enquiry.) And it’s immersed in a round of anti-trust cases over the alleged manipulation of propane prices, even though BP agreed a $303m settlement with the US justice department in 2007.

Back in 2007, Hayward had big boots to fill and it wasn’t the most auspicious time to fill them. His predecessor Lord Browne had been chief executive of BP for twelve golden years and many considered him almost irreplaceable, at least until the problems surfaced at the Texas City refinery. Due to retire at the end of 2008 when he reached 60, the compulsory age for stepping down, Lord Brown’s departure was brought forward by 18 months to July, 2007. By then Hayward was already the anointed successor.

However the board forced Lord Browne’s resignation two months early after the Daily Mail newspaper won an injunction against publishing a story about information he had provided a London court in relation to his private life. It wasn’t quite the accession to power that the 48 year-old Hayward or the board wanted.

Few outside BP knew quite what to expect when Hayward was given one of the biggest jobs in global energy. However he’d had plenty of experience and inside knowledge of the firm. A PhD in geology from Edinburgh University, he’d been with BP for a quarter century, working his way up from a lowly rig geologist in Aberdeen to increasingly senior positions in France, China, Colombia and Venezuela. In between, he served a couple of valuable years back at head office as the executive assistant of Lord Browne who was impressed by him at a leadership conference.

By 1997 he was a director of exploration and production, and in 2000 became group treasurer where he gained a valuable insight into the financing of the giant corporation. Once he was appointed CEO of exploration and production in 2002 - probably the linchpin position at any oil and gas company - he was well on the way to the top job.

If the board wanted a new broom, perhaps they were impressed by Hayward’s willingness to speak his mind. At a meeting in a town hall at Houston in late 2006 in the wake of the Texas City explosion, the then head of exploration and production reportedly commented: “We have a leadership style that is too directive and doesn’t listen sufficiently well. The top of the organisation doesn’t listen sufficiently to what the bottom is saying.”

Given that kind of candidness, it could hardly be a surprise when Hayward laid out his stall and it turned out to be a very different one from Lord Browne’s. In a nutshell he saw BP as a bloated firm that had lost its focus and was beset by problems that ultimately reflected on the quality of management. His answer was the “Forward Agenda”.

Nobody can say BP isn’t focused now. One of Hayward’s crucial measures is the $60 barrel of oil. That is, BP has identified it as the benchmark price for the firm’s sustainability and has aligned the entire business to that figure. At anything more than $60, it’s looking good for the company.

The CEO has ridden his luck. In the last few months BP has made a giant find in the Tiber field in the Gulf of Mexico and, along with new partner China National Petroleum, it’s bought access to the super-giant Rumaila field in Iraq discovered over 50 years ago by BP. Although Hayward’s been criticised for the latter deal because it’s said to favour Iraq too much, he insists BP’s inside knowledge will guarantee a 15-20 percent return. “We know the rocks,” he said, sounding like the PhD in geology he is.

The green lobby shouldn’t expect miracles from Hayward who is realistic about the challenges of creating a greener world. “The transition to a lower-carbon economy won’t happen overnight,” he said in a recent speech, citing the 30-year cycle in the energy industry’s infrastructure. “At BP we estimate that by 2030 [hydrocarbons] will still be satisfying about 80 percent of our energy needs.”

But if it can be done faster, he’s probably the man for the job.

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