In a most astonishing development, John Browne, the Head of BP (British Petroleum), Europe's second largest oil company and world's third largest after ExxonMobil and Royal Dutch Shell, announced in January, this year, the decision to step down from his post 17 months ahead of his scheduled retirement. The news took the markets and industry watchers by surprise as no one expected the man who was instrumental in transforming BP from being an obscure oil company into a "Super-major", the elite club of global big oil companies, to leave the company in haste. However, the sudden exit just confirms the fact that all is not hunky- dory with the British oil major and this might have been the reason for Browne to relinquish charge. In fact, a recent spate of mishaps in several refineries and oil pipelines spreading across the world has not only jeopardized the smooth functioning of the energy giant but also tarnished its reputation. This prompted Lord Browne to part ways with the company, taking all moral responsibilities on his shoulders.
The safety and security lapses have been troubling the oil major like never before, which have also been reflected in the eroding profitability and declining investors' confidence levels. The BP share has lost 5.7% in value this year while it slid by 8.3%, last year. Since the beginning of August 2006, the company has incurred losses to the tune of nearly $39 bn in market capitalization as its stock price plummeted. The fourth-quarter result of BP, which came to public in the month of February also reported a 12% fall in the profits due to increased safety spending and declining oil prices. The same trend has also been observed in production figures which, for the entire 2006, declined by 2.2%; i.e., down to 3.93 million barrels per day. It is estimated that the decline will be further up to 3.8-3.9 million barrels per day in 2007. |
