Time to bid farewell

London, Jan. 13 (Reuters): British Petroleum (BP) chief executive John Browne will step down at the end of July, 17 months earlier than planned, the oil giant said on Friday. The announcement puts an an end to months of uncertainty about the leadership of the company.

Browne, will be succeeded by Tony Hayward, one of the favourites for the position. Hayward is currently head of the exploration and production (E&P) unit, BP’s core division.

Analysts said the move follows a spat between Browne and chairman Peter Sutherland last year. Sutherland had then pressed Browne to name a firm date for his retirement, originally expected in early 2008.

Browne, who was credited with turning a troubled BP in the early 1990s into one of the most respected companies, announced last July that he would leave at the end of 2008 and a successor would be named early this year.

“Having made the decision, which the board fully supports, we concluded that a six-month handover would be more appropriate,” Sutherland said in a statement on Friday.

Browne joined BP in 1966 and was appointed CEO in 1995, after previously running the E&P division. He led a round of industry consolidation with the acquisition of US oil companies Amoco and Arco in the late 1990s. BP is now the world's third-largest western oil company in terms of market capitalisation.

Until recently, Browne was seen as a visionary for his takeovers and his environmental record.

BP was among the first oil companies to acknowledge global warming and invested huge sums in renewable energy.

But problems in the US, including a string of fatal accidents at a Texas refinery and sloppy maintenance of a key oil pipeline in Alaska, have tarnished his image.

Investors were also concerned that a long handover period could lead to stagnation at BP, with difficulty pushing through major new initiatives.

Share rally

BP shares were up 1.8 percent at 546-1/2 pence in London and later closed at around five percent in New York. The stock lost almost 8 percent in 2006. “I see it as positive news,” said Jason Kenney, an oil analyst at ING in Edinburgh.

“They had a difficult choice because there were a number of positive people who could have taken over the role. The fact that Tony Hayward has got it will enable BP to move forward and put the succession debate behind them and get on with the job,” said Kenney, who has a ‘Hold’ rating on the stock.

Hayward, who joined BP in 1982, was appointed to the main board in 2003, becoming CEO of BP’s exploration and production business.

“He was the most probable option, so it doesn’t come as a surprise,” said Stephane Foucaud, an analyst at Societe Generale in London.

“If I had bet, I would have bet on him. He comes directly from the E&P side of the business. E&P is the most important side of the business, so he has worked very closely with Lord Browne,” Foucaud said.

Keith Stribling, portfolio manager at Boston-based HighMark Value Momentum Fund, said the departure should perhaps have happened earlier and that investors may remain sceptical for a while, given the spate of negative events that have hit the company in the US.

“But it’s a good company with great assets and the problems they have can be fixed,” he added. Stribling’s fund does not own BP stock now, but recently did.

Analysts also dismissed speculation that Browne’s departure could indicate the company was looking for a merger with another oil company.