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Tony Hayward, BP's new chief executive, has vowed to cut jobs and slash bureaucracy at the oil giant in a radical shake-up that will further tarnish the reputation of his predecessor, Lord Browne.
In a blunt message to BP's 100,000-strong worldwide workforce Hayward said the company's performance had "materially lagged our peer group in the past three years".
He said that while some blame could go to refining and production problems, much of the shortfall was a result of "unacceptably high overhead costs".
BP said redundancies were inevitable. Hayward would not speculate on how many staff would lose their jobs, but since taking over from Lord Browne in May he has become increasingly frustrated at the layers of middle management built into BP, especially since he believes many jobs are duplicated across different business units.
In some areas, Hayward's review has identified up to 11 levels of decision-making between senior management and frontline staff. BP believes it can reduce this to seven in many cases.
Hayward's first proposal is to streamline BP into just two business units: exploration and production; and refining and marketing. Corporate infrastructure will then be "rigorously reviewed".
Hayward's damning assessment is, in effect, an indictment of the management regime of Lord Browne, who was forced to step down from the company ahead of schedule this year when it emerged he had perjured himself during legal hearings aimed at preventing a newspaper publishing revelations about his sexuality.
BP's operational performance during the final years of his leadership has been increasingly criticised.
The company had a series of major safety failures, including an explosion at its Texas City refinery which killed 15 workers.
Revenue this year has been dented by production problems that have prevented its biggest United States refineries, Whiting and Texas City, from operating at capacity during a period of record margins for the oil business.
In addition, the company has faced delays in bringing new production on-stream in the Gulf of Mexico projects.
The picture on redundancies at BP will be complicated by the fact that Mr Hayward has vowed to continue recruiting frontline staff for technical and engineering works. He believes a major factor in BP's production problems has been its over-reliance on external contractors.
The reorganisation is the biggest shake-up at BP since the early 1990s, when thousands of jobs were lost during a major cost-cutting exercise. It comes two weeks before the third-quarter results that are expected to be disappointing.
- Independent
