John Browne: the man who changed the oil industry
John Browne has told the story of his life at BP. It is an engrossing insight into the rise and fall of one of the oil industry's greatest leaders, writes Derek Brower
BY 2007, John Browne's star had faded. Operational blunders in the US, including the explosion at the Texas City refinery that killed 15 workers and an oil spill that shut down the Prudhoe Bay oilfield in Alaska, had undermined BP's reputation. Critics of the company blamed Browne's cost-cutting, accused him of failing to integrate employees inherited from the Amoco takeover and delighted as the "Sun King's" image was tarnished.
And then Browne lied in a witness statement used to support an injunction to stop the press from publishing embarrassing allegations stemming from a greedy former boyfriend. Humiliated, he resigned from BP just a few months before his planned retirement.
That these events should dominate the legacy of one of the oil industry's most successful executives is deeply unfair. Would his dissembling about the details of his relationship have mattered to anyone if Browne had been heterosexual? Doubtful.
The Texas City disaster will always haunt him and his reputation. But claiming that Browne was personally culpable is to stretch the limits of reason. To be sure, something had gone terribly wrong at BP; and practices ensuring safety had corroded like an Alaskan pipeline. Inquiries found numerous examples of failure. Nonetheless, despite the advice of his lawyers, Browne immediately admitted BP's responsibility for the accident and expressed his deep sorrow. Some of BP's rivals could have taken a lesson from that example.
Setting the global agenda
They learned other things from BP, however, because the company set much of the agenda for the global energy industry during Browne's reign as chief executive. The take over of Amoco in 1998 launched the merger mania among the majors. BP, says Browne in his autobiography*, considered first a merger with Mobil. Partly in response to the Amoco deal, Exxon pounced on that firm. Lou Noto, Mobil's boss, would later tell Browne that a buy-out by BP would have been preferable.
BP grew bigger with the addition of Arco in 2000. In 2005, Browne and Jeroen van der Veer, head of Shell discussed a more momentous transaction between their two firms. A decade earlier, such a proposal looked "disagreeable" to Browne. But the dynamics of global energy had changed and Shell's reserves scandal offered an opportunity.
BP missed that boat, Browne says with regret. But by then it had also re-entered Russia in a joint venture with TNK, having turned down the offer of a stake in Mikhail Khodorkovsky's Yukos. TNK-BP made the UK company second in size only to ExxonMobil. And, again, it forced a reaction from BP's rivals. ExxonMobil entered negotiations with Yukos, a move that would contribute to the dominant events of Vladimir Putin's reign as president of Russia: the destruction of Yukos and imprisonment of Khodorkovsky. Browne's sympathy for the jailed oligarch was limited. He had crossed the line between politics and business, he writes.
The book gives other such insights into goings-on at the very highest levels. In its efforts to win favour in Kazakhstan, for example, BP arranged the health care of its autocratic president, Nursultan Nazarbayev. Indeed, although Browne considered UK prime minister Tony Blair a mentor and friend, he was also comfortable at the side of less democratically minded leaders: Muammar Qadhafi in Libya, China's premier Wen Jiabao, Azerbaijan's Heydar Aliyev and others.
Alliances with leaders in corrupt countries is part of the oil business, and Browne offers no apologies for pursuing them. The blood of the company he ran coursed through his veins. BP shaped Browne. But he also shaped BP and tried, despite the mockery of rivals and activists, to use it as a force for good in the world.
Cynics decried the "beyond petroleum" rebranding of the company and its adoption of the helios emblem. The accusation of greenwashing was easy to make while BP was promising shareholders output growth alongside claims it would help green the world. Spilling oil on the Arctic tundra drove another wedge between what the company was saying and what it was doing. Yet Browne's sincerity on subjects such as climate change and pollution is unquestionable.
His ground-breaking 1997 speech at Stanford University, in which he said the link between man-made carbon emissions and global warming could not be discounted and so demanded action, put BP at odds with its peers, especially in the US. Lee Raymond, then head of Exxon, had a very different view, Browne writes, "and we never agreed on this issue". BP had left the church.
Nor did other companies endorse Browne's and BP's decision to support the publish-what-you-pay campaign and the Extractive Industries Transparency Initiative. Even some in BP now say, in retrospect, that Browne blundered in revealing the terms of his company's engagement in Angola. That antagonised the government (Browne quotes from a letter to BP from the head of Sonangol expressing his "disbelief" that the UK firm had published the details of its signature bonus). It has also given less scrupulous firms an advantage in some countries.
BP's commitment to better behaviour was a reaction, suggests Browne, to mistakes in countries such as Colombia, where it learned its credibility with international media would be affected by how it related with locals. Corporate social responsibility has lost some of its shine in more straitened financial times. But after the Colombia experience – where BP was accused of employing murderous militias to defend its installations – Browne committed BP to observance of human rights. Its involvement In Tangguh, Indonesia, and in the transit countries of the Baku-Tbilisi-Ceyhan pipeline showed a more caring, locally engaged company, he believes. Engaging with non-governmental organisations and environmentalists to improve the company's record changed BP.
The powerhouse inherited by Tony Hayward in 2007 has scaled back some of Browne's rhetorical ambitions. Its focus is again on petroleum. It has sought to restore operational credibility and moved in different directions. Browne considered the oil sands too inefficient and environmentally damaging; now they are a growth region for BP. Last month, it added Brazil's promising upstream, missed by Browne, to its portfolio. Hayward was groomed for succession, but the tenor of his rule is very different to Browne's. Improving BP, not the world, seems his priority.
Browne's life at BP spanned many changes in global energy politics, from the creation of Opec; to the advent of resource nationalism; the opening of Russia; and the rise of Chinese consumption. He transformed a fading, colonialist company with two "pipelines" in its business (Alaska and the North Sea) into a global powerhouse. He made enemies along the way. Eventually, he flew too close to the sun, and his fall was spectacular. He takes pride in his achievements, which were huge, but his book hides none of the failures. A complex, tender and, in the end at BP, lonely man, Browne was always different from his peers. For the breadth of his vision alone, it is no insult to Hayward to say the oil world has not yet found a match for Browne.
*Beyond Business: An Inspirational Memoir from a Visionary Leader. John Browne, with Philippa Anderson. Weidenfeld & Nicholson, London: 2010.