John Browne was due to leave BP anyway. But his premature exit could still herald more bad news for the company By Derek Brower, journalist IN THE end, it wasn’t the fatal fire at the Texas City refinery in 2005 that did for Lord Browne, BP’s outgoing chief executive. It wasn’t the problems at the company’s Thunder Horse platform in the Gulf of Mexico, the corrosion of pipelines from its 400,000 barrels-a-day oilfield in Alaska, or the allegations that BP was rigging the US propane market. And it wasn’t even BP’s cynical involvement in the Russian auctions last month, when the company helped the Kremlin legitimise a firesale of the remaining assets belonging to Yukos. Browne had friends in high places Any one of those errors could have – and perhaps ought to have – brought the illustrious career of Browne to an end. As it happens, he was due to leave anyway later this year, to be replaced by Tony Howard. BP’s chairman, Peter Sutherland, had orchestrated that succession in an attempt to persuade the City and BP’s international partners that the company would regain some of the composure with which it had, until recently, been associated. That was becoming increasingly difficult under Browne. Once dubbed the “Sun King” of the energy industry, Browne transformed BP from one of the oil industry’s medium weights into one of its heaviest hitters – the success story of the last 15 years. Buying Amoco for $56bn in 1998, Atlantic Richfield for another $32bn in 1999, and other smaller players brought it international scale. And after one failure in Russia with Sidanko, BP’s $7bn merger with TNK bought the company reserves that it would have spent years looking for elsewhere. But instead of leaving his job at the head of BP for the right reasons – worst of all, for heading up a company that made a series of large blunders, one of them killing 15 people – Browne was forced to resign from the company he transformed for one very bad reason. According to court documents, Browne lied about the nature of his relationship, and specifically how it started, with another man. That was because he wanted to stop the man, Jeff Chevalier, from publishing a sordid tale about their relationship in a British tabloid. Chevalier claims that Browne discussed with him the BP strategy and the details of meetings with other executives and politicians, including UK prime minister Tony Blair. Tabloid efforts to turn this revelation – and other allegations about Browne using his money and resources to help Chevalier – into some kind of wider scandal ought to be dismissed by any sensible observer. Many commentators already suggest that Browne was the victim of blackmail. After the relationship ended, Chevalier, it is reported, wished to be kept in the same lavish lifestyle to which he had been treated as Browne’s friend. When that didn’t happen, he went to the tabloids. Browne’s homosexuality has been known to many in the oil industry for years. That he rose to the top of BP is a tribute to the company’s defiance of prejudice that still exists in the City. Browne’s efforts to keep his sexuality private were largely respected. Open acknowledgement of his homosexuality would hardly have helped his company in negotiations in countries like Russia or Saudi Arabia. And as Browne said, he always considered one’s private life to be private. Outside the energy industry, many will feel sorry for Browne. He will forfeit around £12m in benefits by leaving under these circumstances. But inside the industry, a good number won’t mourn his exit. Browne’s efforts to rebrand BP as “Beyond Petroleum” irritated oil executives in the US and elsewhere. His apparent commitment to green energy was considered disingenuous and the way he proclaimed it was seen to be preachy. What next? Where does Browne’s departure leave BP? Given the close relationship Browne enjoyed with many of the world’s leading politicians, Tony Hayward will need to show a great deal of diplomatic skill, quickly, if he is to preserve the company’s political influence. Hayward has many doubters. His career has been closely associated with Browne’s, leading some critics to ask whether his leadership will bring the fundamental changes to the company that are needed in the aftermath of BP’s problems in the US. Furthermore, as head of the company’s exploration and production, Hayward should also be aware that the company’s future hangs in the balance, as the Kremlin looks greedily at BP’s assets in Russia. TNK-BP accounts for around 30% of BP’s total reserves – and around 25% of its production. The Russian joint-venture also arguably offers BP the company’s single most important growth opportunity. Browne knew this. And so does Russia’s president Vladimir Putin. That is why the stakes are so high for BP in Russia. Losing control of the Kovykta gasfield to Gazprom, which seems likely to happen some time this year, would be a blow to BP. Any other encroachments on its position in Russia would be disastrous for the company. Browne worked hard to cultivate a relationship with Putin to stop that from happening. In frequent visits to Moscow, he was trying to keep the Kremlin’s good will. And he took along Hayward to recent meetings at Putin’s dacha. The company’s scandalous participation in the Yukos auctions was part of its efforts to preserve that relationship. So was BP’s decision to invest $1bn in Rosneft when the company floated on the London Stock Exchange last year. Browne’s departure from BP now comes just a year before Putin himself will leave his position at the top of Russia Inc. What happens to BP in Russia in the meantime could determine whether BP’s successes of the last decade will be consolidated under Hayward – or whether Browne’s exit will herald further bad news for a company that has grown accustomed, in the last two years, to the wrong kind of headlines.