Tony Hayward’s Future After BP Gulf Oil Spill
As oil continues to gush into the Gulf, the oil giant’s embattled CEO, Tony Hayward, is on an around-the-world tour to save his company and his reputation, but Tom Bower reports that he’s likely to be gone soon—and the company’s new plan to shift the blame.
Late this morning, Tony Hayward, BP’s beleaguered chief executive, will land in Azerbaijan, the oil-rich country by the Caspian Sea, as part of his global mission to save the corporation from rumors and predators. Having visited Moscow last week to tell the Kremlin’s leaders that BP is not for sale or going out of business, he will bring the same message to the Azeri president before heading off to Angola. Indonesia and Iraq, also crucial to BP’s global oil reserves, are among other destinations on his itinerary.
[Hayward] does not understand politics, dealmaking or leadership. He is simply a decent geologist who enjoys sailing. His fate has become irrelevant to BP’s future.
Saving BP from collapse has become a full-time occupation for Hayward, although few believe that he can simultaneously save his own career. Brutally mauled by senators during a merciless grilling in Washington three weeks ago, Hayward’s fight for BP’s survival has also become a personal mission to salvage his self-confidence. Although he has no serious enemies within BP, even loyalists speaking off the record admit that he is swinging in the wind. There he will remain until the oil stops gushing into the Gulf.
Within the next four weeks, the corporation expects the well to be capped and the disaster finally contained. According to recent reports, a relief well is now just 20 feet from the rogue well and boring down the last 900 feet on an identical path toward the reservoir 18,300 feet beneath the seabed, where at least 1 billion barrels of oil could still escape into the Gulf. By early August, BP’s engineers hope to execute a “bottom kill,” blocking the rogue well with mud and sealing the leak. After that, Hayward can be expected to make an elegant if reluctant exit.
Just how the mild, 53-year-old geologist blessed with average intelligence became BP’s chief executive is a damning indictment of the pernicious culture that Hayward himself knew needed to be exorcised. But eradicating the poisoned legacy he inherited from John Browne, the publicity-seeking architect of BP’s rejuvenation since the 1990’s, proved too much for a man whose only qualification was to be “not Lord Browne.” Browne, Hayward knew, had weakened BP’s engineering expertise. In pursuit of high profits, Browne had championed “more for less,” cutting costs, especially in safety and maintenance. To prevent more calamities like the accidents in Texas City and Alaska, Hayward needed to rapidly revolutionize BP’s culture. He failed and the consequence was the catastrophe in the Gulf.
Some would say Hayward has still not learned his lesson. He has appointed Mark Bly, BP’s safety and operations chief, to investigate the causes of the blowout. Appointing an insider to investigate his own mistakes reveals the same political ineptitude as Hayward himself has committed in a succession of media fluffs that climaxed at the congressional hearing. After seven hours of grilling in Washington, Hayward emerged shell-shocked and confessed to his own limitations. ‘ I’m not a politician,” he moaned. After that, nonexecutive members of BP’s board ordered that he should be eased out of the frontline.
David Cameron, the new British prime minister, is credited with calming the hysteria that infected the White House. Pertinently, it was not Hayward who was the principal liaison with Cameron before his first conversation with President Obama but John Gerson, a former MI6 officer responsible for BP’s government relations. Gerson told Downing Street to warn the president not to “talk BP into destruction.”
Simultaneously, Hayward was removed from managing BP’s operations in the America. That poisoned chalice was handed to Robert Dudley, a Mississippian oil engineer formerly employed by Amoco who joined BP after the two corporations merged in 1998. Dudley was a rival to Hayward in 2007 to succeed Browne. Both are tainted by their dependency on Browne for promotion and, critically, neither possesses the necessary ruthlessness and political savvy to fundamentally change BP’s culture.
Pertinently, Hayward and Dudley are linked by a debacle that mired BP in 2008 and from which neither emerged with great credit. Among John Browne’s successes was his investment in 2003 in TNK, a huge Russian oil company owned by three oligarchs who knew nothing about oil. Browne understood politicians, especially dictators. He smoothed relations with Mikhail Fridman, the senior oligarch, to fashion a 50/50 partnership that became the envy of Western oil companies. Dudley was sent to Moscow to manage the TNK-BP partnership. By 2008, war had broken out between Dudley and Fridman. Hayward pleaded for peace in the Kremlin and failed. Harassed by the secret police and the oligarchs, Dudley fled to Paris. Hayward openly threatened Fridman and the Kremlin with sanctions. Fridman’s response was crushing: “Tony, you’re trying to scare us, and a lot more dangerous men have tried and failed.” In the opinion of the battle-scarred oligarch, “If a dog barks, it can’t bite.” Hayward was damned as a harmless puppy.
Hayward returned to London admitting defeat. BP’s fate in Russia appeared to be terminal, and the corporation’s very survival as an independent oil major was, like today, doubted by many observers. Two years later, not accidentally, Hayward is faced with the same dilemma. He does not understand politics, dealmaking or leadership. He is simply a decent geologist who enjoys sailing. His fate has become irrelevant to BP’s future.
There is however in his armory one last weapon to be deployed to restore some self-respect. Assiduously, BP has accumulated sufficient evidence, a source inside the company says, to shift much of the blame for the blow out onto the three American sub-contractors. Days after the well is finally capped, Hayward will authorize the report’s publication. The goal is, first, to begin the hard chore to restore BP’s reputation and, secondly, to humiliate the Senators who heaped all the blame on BP and himself. Many think the report will be too late to make much difference but Hayward will want at least to depart BP with some self-respect.
Tom Bower is the author of Oil: Money, Politics, and Power in the 21st Century a distinguished investigative historian, broadcaster, and journalist, as well as the author of several bestselling books about tycoons, politicians, intelligence, and post-war Europe.