The chief executive of BP, Lord Browne of Madingley, yesterday announced that he is to step down and sever all ties with the company at the end of 2008 after losing a boardroom battle with the chairman, Peter Sutherland.
The announcement came after Mr Sutherland rejected attempts by BP's chief executive to stay on well beyond the retirement age of 60. Mr Sutherland is also understood to have clashed with Lord Browne over an abortive plan to merge with BP's arch-rival, Royal Dutch Shell.
Lord Browne said he would not reverse his decision to retire, even if the board asked him to stay on. However, in a compromise move, he has won agreement to remain at the helm of BP until the end of the 2008, even though he should formally retire in February of that year on reaching 60. This will enable Lord Browne to lead the company throughout what will be its centenary year.
According to well-sourced reports, Lord Browne is said to have clashed with Mr Sutherland over the timing of his retirement at a tense meeting between the two last Friday, during which the BP chairman demanded a statement be issued alongside yesterday's half-year results confirming Lord Browne would retire, as planned, in 2008.
The apparent souring of the relationship raises questions over whether the two men will be able to continue working together for the next two and a half years or whether Mr Sutherland, or for that matter Lord Browne, will leave before the end of 2008.
However, looking relaxed and comfortable yesterday and finding the time to joke with the press, Lord Browne said he had been "astonished and rather shocked" by the reports. He denied there was any rift with his chairman and said theirs was a relationship based on "mutual respect".
Lord Browne also maintained he had always intended to leave BP at 60 and that the issue of succession had been under discussion with the chairman and the rest of the board for a "very considerable time".
Nevertheless, friends of Lord Browne continued to insist he would have stayed on beyond 60 had the board invited him to do so but met fierce opposition to the idea from Mr Sutherland. Sources close to the BP chairman suggested Lord Browne's supporters had not, in the end, done him any favours.
There are five internal candidates to succeed Lord Browne as chief executive and, although the board is expected to interview external candidates, it was said this would be only for "benchmarking" purposes.
Lord Browne declined to say what he intended to do after BP, but was adamant he was not about to retire. "I don't believe in retirement. It is an idea invented by Bismarck and is a touch out of date. It is a long time since he died and things have moved on. I am going to leave BP but I am not retiring. I am changing jobs."
He said age had nothing to do with his decision to leave BP, nor should it be a bar to whoever took over in his job. He said it was important that people were allowed to have "many different identities" and one of those was being older than anyone else and it not mattering.
Lord Browne also defended BP's controversial decision to take a $1bn stake in the flotation of the state-owned Russian oil company Rosneft. He said that BP was fully satisfied the investment met its ethical guidelines despite claims that Rosneft's main asset was stolen from the rival oil company Yukos. Lord Browne said it was important to encourage Rosneft to become more open, transparent and engaged by inviting Western investors to buy shares.
The announcement of Lord Browne's departure date overshadowed a record $6.1bn (£3.3bn) profit for the second quarter and the announcement that BP is to spend an extra $1bn over the next four years to improve safety at its much-criticised refineries in the US and Alaska which have suffered from major fatalities and leaks.
Pouring oil on troubled waters
I have been reading speculation about my own position and was astonished and rather shocked by it all. I want to be completely clear. As I have said many times, I will be retiring in 2008. Peter Sutherland [BP's chairman] and I have discussed this and agreed between ourselves and the board that I will be leaving BP at the end of 2008. Even if I was asked to stay I would decline. There is no rift between Peter and myself. There is a long-standing relationship based on mutual respect. Neither of us is a pushover. By mutual respect I mean having a good and vigorous discussion about things. There is a process for choosing my successor put in place by the board last year. I am being asked for my input and the standard of candidates is very strong. Let me repeat, I will be retiring from BP, though not from work, in 2008.Reuse content