The Squeeze: Oil, Money and Greed in the 21st Century. Tom Bower

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СКАЧАТЬ produced successful results. Horton’s public predictions, accompanying jerky attempts to build solid corporate foundations, compared poorly with Rawl’s rare but pertinent statements about Exxon’s unflustered deliberations. As oil prices gyrated in late 1990 from $40 down to $31, Rawl cautioned that uncertainty made investment decisions difficult: ‘This is a long-term business. We cannot turn the money off and on every time someone clears his throat in the Middle East or elsewhere as the price goes up and down.’

      The ‘cough’ was Iraq’s invasion of Kuwait in August 1990. America’s oil industry was still struggling. Oil production had fallen every year since 1986 by between 2.5 and 6.5 per cent. Banks remained reluctant to lend because of the continuing uncertainties. The oil business, it was said, was as safe as rolling dice in Las Vegas. Even Exxon lacked sufficient money and personnel to instantly boost production. The US government offered no leadership to fashion a new energy policy. In 1988 America had believed that George Bush Snr was the oil industry’s dream candidate, although as Ronald Reagan’s vice president he had offered it no help, and he had in fact campaigned for the presidency as an environmentalist. During his single term, Bush would dilute an Energy Bill giving the industry minor tax relief, would not limit imports, and would cancel the sale of eight offshore leases. Texans, surrounded by abandoned derricks, were angry that the president sent the army to Kuwait out of fear of losing 1.5 million barrels of oil a day, but that no one appeared to care about Texas’s similar losses since 1986. Their anger spread to contempt for east coast liberals and Californian environmentalists who nevertheless still harboured a sense of entitlement that energy should be abundant and cheap. Hoping for a cautious recovery from that economic devastation, Horton concluded that ‘the fundamental realities point to higher oil prices’. BP, he decided, needed to change fast.

      The hyperactive Horton lacked Rawl’s gravitas. He misunderstood Exxon’s foundations, created in around 1865, and built on vast untapped reserves of oil. Ever since John D. Rockefeller’s retirement in 1897, the corporation had been led by domineering personalities moulded by Exxon’s character and caution. Unlike that prototype, Horton was not fashioning himself as a conservative, sober, confident chieftain, but was duplicating the caricature of a brash American chief executive. After four years in Cleveland, he had forgotten that BP was a British Boys’ Club, uniting in a collegiate atmosphere people who had lived, worked and played together for 25 years. Running too fast, he was failing to implement his own plans. Instead of focusing on the cuts, he ordered BP to expand despite the continued recession. At a time when the price of oil was about $16 a barrel and slipping, he expected that it would rise to $21 or even $25. Convinced of his own genius, he welcomed personal publicity. Impulsive and careless with his language, he told the first journalist invited into his office: ‘I’m afraid because I am blessed by my good brain which is in advance of my colleagues’, I tend to get to the right answer rather quicker and more often than most people.’ (He would forever regret this remark: ‘It came out wrong, and I have had it hung round my neck ever since – never ever did I think I was a genius, far from it.’) The cover of Management Today featured Horton holding a hatchet, while Forbes magazine photographed him sitting on a throne. There was gossip within BP’s headquarters about Horton asking his secretary, ‘Should I go to a charm school?’ His insensitivity bewildered his colleagues. Newspapers began reporting Horton’s unpopularity, one asking: ‘When Robert Horton and his wife return from their holiday in Turkey, many BP staff will hope that their plane will crash.’ David Simon, a managing director, was told that Horton concealed such criticisms from his mother. ‘Good God,’ exclaimed Simon. ‘Horton has a mother!’ Another executive told Horton to his face, ‘Why don’t you bugger off to Chessington Zoo and watch the gorillas and monkeys?’ ‘Why?’ asked Horton. ‘Because you might learn a lot.’

      Relations between Horton and his fellow directors were not improved after they arrived at Heathrow airport on 23 June 1992 to fly to Alaska for a board meeting. Horton was overheard having an unseemly argument with the BA employee at the check-in desk. The atmosphere at the board meeting was fractious. BP would record its first quarterly net loss of £650 million ($1.24 billion) after its income fell by 82 per cent, compared to a £415 million profit in 1991. The debt had increased to $16 billion and the share price had slid from 332 pence in June 1990 to 209 in June 1992. ‘We’re bleeding cash like crazy,’ said one director, querying why the proposed cuts had not materialised, especially at the refineries. ‘You can count on BP’s DNA to find an inspired route out of the trouble,’ countered a Horton sympathiser, only to be crushed by another director: ‘Exxon and Chevron don’t get into trouble.’ Oblivious to the storm, Horton insisted during the board meeting that BP should pay a normal dividend to please investors. ‘Could you wait outside?’ he was asked by the banker Lord Ashburton. Beyond his hearing, the reckoning was swift. ‘He’s spent too much time with ambassadors and playing politics in Washington,’ said one voice. ‘And he’s spent too little time on the details of the business,’ added another. ‘Bob is ambitious, abrasive and arrogant,’ concluded a third. ‘We need a change.’ The mood was summarised by Ashburton: ‘There’s been a build-up of small flakes which has become quite a lot of snow on the ground.’ Three weeks later the non-executive directors, including Ashburton and Peter Sutherland, met at Barings bank in the City on a Saturday morning to decide Horton’s fate.

      The unsuspecting chief executive was summoned the following Wednesday. ‘Robert,’ said Ashburton, ‘the board has decided to ask for your resignation.’ ‘My God,’ exclaimed Horton, shocked that his fate was even being discussed. ‘I was brought down as laughable,’ he reflected. ‘I got a head of steam. My mistake was believing change could be done so fast. I should have shown more tenderness.’ The public announcement was stripped of any charitable sentiment. ‘Hatchet Horton’s’ decapitation matched the cultural change he had championed, except that his dismissal was interpreted by outsiders as the final collapse of a stodgy giant. BP, rival oil companies believed, would shortly be receiving the last rites.

      Horton was replaced by David Simon, a trusted team player with expertise in refining and marketing. ‘This is about the style of running the company at the top,’ Simon said about his predecessor. ‘It’s not that I don’t have an ego. It’s just that it’s not terribly important to me.’ Simon, a cerebral linguist, acknowledged his limitations. ‘Look, chaps,’ he frequently smiled during meetings, ‘you know I’m not very bright, so could you explain this in simple language?’ Six weeks after Horton’s dismissal, BP halved its dividend. Horton’s intention to copy Exxon and centralise BP was reversed. Power was devolved to trusted subordinates who would be accountable to business units, an innovation introduced by McKinsey & Company, the management consultants. That suited John Browne, the head of exploration and production and the heir apparent. Although Browne’s admirers described an occasionally soft and lonely character, fond of ballet and opera and not inclined to socialise, he espoused confrontation to resolve problems. BP’s style, he believed, should not attempt to mimic Exxon’s. Hierarchies and conformity were to be destroyed, and to encourage initiative there would be informal lunches, no lofty titles, and meetings between forklift drivers and accountants. Outsiders were greeted by charm, but employees understood the ground rules of a self-styled alpha male: ‘One mistake and you’re out.’ His lesson from Sohio was the importance of consolidation and cuts.

      ‘I’m astute enough to know what I’m doing,’ Browne told Tom Hamilton. In 1991, after working with him for six years, Hamilton admired Browne’s negotiating skills and passion to reduce costs, but questioned his limited experience. In his early career Browne had chopped and changed between jobs, spending just nine months at the Forties field in the North Sea and the same amount of time in Prudhoe Bay, never staying long enough to see his mistakes emerge. Not only was his knowledge about operating in the mud and sand of oilfields superficial, but he lacked any taste for solving engineering problems. Working in an office filled with monitors displaying information to feed his appetite for facts, he concealed his limitations by obtaining detailed dossiers on every face and every issue in order to brief himself before meetings. Browne’s impressive ability to absorb information, СКАЧАТЬ