Browne, John 1948–
John Browne
1948–
Group chief executive officer, BP
Nationality: British.
Born: February 20, 1948, in Hamburg, Germany.
Education: Cambridge University, BS, 1969; Stanford University, MS, 1981.
Family: Son of Edmund (British army officer) and Paula Browne (homemaker); never married; children: none.
Career: British Petroleum Company, 1966–1968, apprentice; 1969–1979, petroleum engineer; 1979–1980, regional petroleum engineer; 1981–1983, manager; 1983–1984, manager of Aberdeen office; 1984–1986, group treasurer; BP Financial International, 1984–1986, chief executive officer; Standard Oil Company of Ohio, 1986–1987, executive vice president and chief financial officer; Standard Oil Production Company, 1987–1989, chief executive officer; BP America, 1987–1989, executive vice president and chief financial officer; BP Exploration and Production, 1989–1995, chief executive officer; British Petroleum Company, 1995–1998, group chief executive officer; BP Amoco, 1998–2000, group chief executive officer; BP, 2000–, group chief executive officer.
Awards: Knighthood, Queen Elizabeth II, 1998; Partners Award, American Oceans Campaign, 1999; Prince Philip Medal, Royal Academy of Engineering, 1999; United Nations Environment Programme, Earth Day Award, United Nations, 1999; Britain's Most Admired CEO, Management Today, 2000, 2001, and 2002; Award for Responsible Capitalism, FIRST, 2000; Ernest C. Arbuckle Award, Stanford Business School Alumni Association, 2001; dubbed Lord Browne of Madingley, Queen Elizabeth, 2001; Public Service Award, Society of Petroleum Engineers, 2002.
Address: BP, 1 Saint James Square, London, SW1Y 4PD, United Kingdom; http://www.bp.com/home.do.
■ Edmund John Phillip Browne, known as John, was always reluctant to talk about himself and his personal life. When Browne spoke, it was so softly that people strained to understand him, yet as Andrew S. Grove of Intel remembered, everyone
in a meeting would become quiet and listen intently. Browne was tough and cerebral and a workaholic who frightened subordinates with his calm, penetrating assessments of their work. He was even tempered, however; practically the only way to make him angry was to pry into his mother's past. Browne was short and slim, dapperly dressed, and given to orderliness that made his offices so clean and tidy that they looked as though no one worked in them, even though he worked tirelessly. Pedantic in his speech, given to wry humor, shy and studious, Browne also was coldly ruthless in managing BP's affairs. His quiet charm overlay a daring personality that would in one moment dispassionately cut costs and jobs and in another moment bet hundreds of millions of dollars on a gamble based on his understanding of the science that underlay his oil business. Browne consistently had his thoughts turned to the future. He believed that a manager's responsibility was to build a company with a long-term future without sacrificing long-term gains for short-term profits.
DIFFICULT BEGINNINGS
Browne's mother, Paula, survived the Holocaust, having been slated for extermination in the Nazi death camp at Auschwitz. Her family perished in Nazi death camps. She was a refugee from Transylvania, Romania, when she met Browne's father. Paula Browne was private and had a horror of discussing or even hearing mentioned her experiences during World War II. Her son was very protective of her, steering the curious away from her as best he could.
Browne's father, Edmund, was a tough, determined officer in the Black Rats tank regiment. Like his wife and as his son came to be, Edmund Browne was a private personality. The most obvious legacy to his son was Edmund's love of smoking cigars. It was also through his father that Browne was drawn to work for British Petroleum, the company that would become his passion. From his mother Browne seemed to have acquired his taste for fine art. He became a collector of 18th-century English furniture, modern paintings, pre-Columbian art, and Robert Mapplethorpe photographs of flowers.
Browne's family moved often, exposing Browne to a variety of cultures. It was probably during a posting in the Middle East that Browne's father became acquainted with the Anglo-Iranian Oil Company, later renamed British Petroleum Company, and in 1958 he took a job with the company. That year Browne was sent to a boarding school, King's School, Ely, United Kingdom. He was a brilliant student, and in 1966 he won a scholarship to attend Cambridge University. He majored in physics while working holidays for British Petroleum. When he was graduated in 1969, Browne seemed destined to pursue graduate studies and a career as a college don. At his father's urging, however, Browne joined British Petroleum for a year and asked for a posting to the United States, hoping to go to New York. Instead he was sent to Prudhoe Bay in Alaska to work as an engineer on a pipeline for British Petroleum's new 14-million-barrel oil field. Browne was enthralled by the work, learning not only about oil engineering but also about business and politics.
Instead of returning to school Browne spent 10 years traveling America, moving from one British Petroleum office to another, all the while absorbing the business and loving the United States. The failure of a love affair in America appeared to permanently taint Browne's personal life. While posted in San Francisco, Browne spent his spare time studying at Stanford University, earning a master of science degree in business. He loved Stanford and would often return there. In 1980 Browne's father died of diabetes. Browne took his mother with him when he was posted to London in 1981, and they lived in an apartment in Chelsea, near the River Thames.
BEGINNING TO REMAKE BRITISH PETROLEUM
In 1982 Browne made his presence felt in British Petroleum when he devised a strategy for selling 0.25 percent interests in British Petroleum's Forties field in the North Sea to other British oil companies. This arrangement allowed the companies to count their drilling expenses against North Sea oil production and lower their British taxes. British Petroleum made $300 million from selling the interests. Browne's cleverness attracted the attention of executives in the company, notably Robert Horton, who in 1986 was sent to Cleveland, Ohio, to straighten up Standard Oil Company of Ohio (Sohio), in which British Petroleum held a 55 percent interest. Horton took Browne with him, in April 1986 making Browne chief financial officer and executive vice president of the company. Browne astounded Horton with the amount of work he did, working all day, every day. Jack E. Golden, a staff geologist, believed huge oil deposits were beyond the continental shelf in deep water in the Gulf of Mexico. Browne acted by spending all of Sohio's exploration budget of $50 million on exploring the deep water of the gulf. It was one of Browne's legendary gambles, and it paid off. British Petroleum not only discovered oil but also bought the rights to much of the new area before other oil companies got there. By 1989 British Petroleum was the largest petroleum producer in the United States. By 1995 the deepwater wells in the Gulf of Mexico were among British Petroleum's most productive and cost-effective. Although drilling costs were as high as 50 times those of drilling on dry land, pumping costs proved so small that British Petroleum's expenses were only $6 per barrel of oil. In the 1990s the value of a barrel had varied from $16 to $32. Golden became chief of deepwater exploration under CEO Browne.
In 1987 Browne oversaw British Petroleum's buyout of the remaining 45 percent of Sohio for $7.9 billion. That year Browne became executive vice president and chief financial officer of BP America. He analyzed the business units of BP America and concluded that most ventures were not profitable. In his typically unemotional manner, Browne sold BP America's production holdings except for those in Alaska and the Gulf of Mexico. That year British Petroleum's worldwide workforce peaked at 129,000 employees. In September 1989 Browne, having that year been appointed CEO of BP Exploration and Production, engineered the sale of some British Petroleum assets to Oryx Energy Company—a November 1988 spinoff of Sun Company. In the process Browne cut more than 1,700 jobs (two hundred in the United States) and $150 million in overhead. Oryx received some of British Petroleum's North Sea assets as well as British Petroleum's Dubai, Gabon, and Italian assets. Overall in 1989 Browne sold assets for $1.3 billion. Meanwhile he advocated aggressive exploration of new areas for petroleum and natural gas.
In September 1991 Browne was elected to the board of directors of British Petroleum. By then Horton was the company's CEO and was leading the company in aggressive expansion into markets such as pet foods and trying to stabilize company earnings in an effort to shield the stock value from the inevitable ups and downs of oil prices in the world marketplace. The expansion did not work as hoped. Oil prices plunged in the early 1990s, and in 1992 British Petroleum lost $624 million. In June 1992 David Simon, the chief operating officer, replaced Horton as CEO. By then British Petroleum's debt was $16 billion.
A NEW WAY OF DOING BUSINESS
On June 10, 1995, Browne was made CEO of British Petroleum, and David Simon became chairman of the board. Simon had done much to stabilize the company and with Browne's help had sold off much that was extraneous to the company's core businesses: petroleum and natural gas. At the time, competitors derisively called British Petroleum a "two-pipe company," meaning it had large reserves only in Alaska and the North Sea, both of which seemed past their peak periods of production. The decline of these reserves would mean British Petroleum's decline. Then British Petroleum's Neptune well in the Gulf of Mexico hit a rich reserve of petroleum, giving British Petroleum a third "pipe."
Browne established three new rules for employees and the company: First, do not spend money you do not have; second, no surprises; and third, ask for help. Browne reorganized the exploration department into small units, each unit being responsible for its own finances. Then he instituted a teamwork strategy that had geologists, petroleum engineers, and drillers meeting together to analyze potential drilling sites. Browne wanted the team members to talk together as a unified group until they had worked out a drilling strategy that met the requirements of the geologic characteristics of the site and the abilities of drilling technology. The previous method had been for geologists to map sites, petroleum engineers to select where to drill, and then drillers to set up platforms and try to drill. The geologists, engineers, and drillers rarely talked to one another, and it could take weeks to ask questions and receive answers. The result was that drilling equipment required many adjustments before achieving success. In 1995 it took one hundred days to drill a deepwater well. By 1997 Browne's team strategy of putting all interested parties together to plan their drilling reduced actual drilling time to 42 days. Furthermore, in 1995 Browne began his intimidating monthly reviews of each business group within British Petroleum. He amazed and even awed scientists and business managers alike with his ability to absorb immense amounts of information and make sense of it. The monthly meetings were sessions during which Browne grilled managers on every aspect of their work. Those who produced positive results were rewarded with challenging projects and promotions; those who did not were let go. A reluctant socializer, Browne found his new job required that he hobnob with business and government leaders. He took to bringing his mother with him to social events, and she proved to be ideal for such occasions, being careful in her speech.
In 1996 Browne began opening British Petroleum gasoline stations in Russia. In Europe he formed a partnership with Mobil, combining British Petroleum's and Mobil's operations and elevating them from being secondary competitors with dim futures in Europe's lubricants market to being a unified major competitor. By the end of the year Browne was looking for companies to acquire. His first step was to sound out Mobil, which was not interested in a full worldwide merger.
On May 19, 1997, in a speech at Stanford University, Browne declared that evidence suggested that global warming could be real. He argued that evidence that burning of fossil fuels was contributing to global warming was sufficient for the matter to be taken seriously by oil companies. This speech was received with horror by other oil companies and with suspicion by environmentalist organizations. Yet Browne made the term "green" a fundamental part of his company's operations. Because carbon dioxide was thought to be a major contributor to the warming of the earth's climate, Browne established a goal of reducing British Petroleum's carbon dioxide output 10 percent by 2010, a reduction of 30 million tons per year. British Petroleum met this goal of 10 percent reduction in 2002. Browne committed British Petroleum to producing cleaner fuels and cleaning up its production waste. The company improved the efficiency of its turbines and cut down on the flaring of gas at its drilling sites. Browne said that British Petroleum should monitor its carbon dioxide emissions, expand solar energy activities, and support research into causes of global warming. British Petroleum spent $160 million building solar panel plants in California and Spain and $40 million on research into solar power. Browne began having British Petroleum plant new forests, because trees absorb carbon dioxide, with two projects in 1997. An internal survey showed that employees at British Petroleum were concerned about the environment. This finding reassured Browne that his green efforts would have wide support in his company. In a disagreement over environmental issues British Petroleum left the American oil industry group Global Climate Coalition, which argued that there was no connection between burning fossil fuels and a warming climate.
Meanwhile Browne had cut his workforce to 53,000 employees, mostly by selling assets unrelated to the business of producing power. British Petroleum's debt had been reduced to $9 billion. There was controversy over British Petroleum's conduct in Colombia, where the company was accused of buying arms and training paramilitary forces to protect the company's oil pipeline from its oil field to the sea. In Russia, British Petroleum purchased 10 percent of Sidanco for $484 million. This deal was Browne's opening effort in British Petroleum's involvement in the development of Russian petroleum fields.
ONE OF THE THREE SISTERS
There were two companies known as "supermajors" in the oil business—Exxon and Shell. By the end of 1998 there would be a third supermajor, and the trio would be dubbed the "three sisters." In May 1998 Browne called H. Laurance Fuller, the chairman of the board of Amoco, about acquiring Amoco. In August 1998 British Petroleum purchased Amoco for $57 billion, and British Petroleum renamed itself BP Amoco. On December 31, 1998, Browne's title became group CEO. Stephen F. Gates, the general counsel for Amoco, became Browne's chief of staff. BP Amoco gained oil and natural gas fields in Azerbaijan, the Gulf of Mexico, the North Sea, Trinidad, the United States, and Venezuela. The purchase of Amoco made BP Amoco's workforce 99,000 employees. In 1999 this number was cut to 89,000. This and other cuts in expenses eventually saved the company $2 billion annually. Not all went Browne's way in 1998. In Russia, Sidanco went bankrupt, and the Russian company Tyumen Oil, which was run by the young tycoon Mikhail Fridman, manipulated Russian courts to gain control of an oil field that Browne had coveted. In a bright spot in Browne's personal life in 1998, Queen Elizabeth II made him a knight, upholding a British tradition whereby the monarch bestowed honors each year on her birthday.
In January 1999 Browne had a pleasant surprise when Mike R. Bowlin, the head of the Atlantic Richfield Company (ARCO), offered to sell ARCO to BP Amoco. In April 1999 BP Amoco purchased ARCO for $27 billion in BP Amoco stock. ARCO owned 22 percent of Prudhoe Bay, and BP Amoco owned 51 percent, but U.S. government regulators wanted BP Amoco to give up its ARCO Alaskan holdings. BP Amoco sold these holding to Phillips Petroleum for $7 billion, leaving BP Amoco with control of 45 percent of Alaska's oil. More important to Browne were ARCO's natural gas holdings. BP Amoco owned 13 percent of Prudhoe Bay's natural gas, but ARCO owned 43 percent, and the ARCO Tangguh facility in eastern Indonesia had 14 trillion cubic feet of natural gas. Browne later explained that he foresaw petroleum decreasing in importance while he believed the reserves of cleaner-burning natural gas to be in essence infinite and therefore the future in supplying the world with inexpensive power. Browne also hoped to retain talented executives by keeping them challenged with buying financially troubled ARCO, which required much work to be made successful. During the negotiations with ARCO, Browne's six-cigar-per-day habit caused him breathing problems when he exercised.
In keeping with Browne's belief that demand for alternatives to oil would grow faster than demand for oil would, on April 6, 1999, BP Amoco bought Solarex, making BP Amoco the world's largest solar power company. Also in that month BP Amoco began equipping two hundred British gasoline stations with solar panels. Meanwhile BP Amoco discovered the Crazy Horse Tract in deep water in the Gulf of Mexico. The tract contained 1.5 billion barrels of petroleum. By then BP had 3.7 percent of the world's oil supply. Trouble came from human rights activists when BP Amoco paid hundreds of millions of dollars to the government of Angola for rights to deep-water drilling off the nation's coast. The money was used to finance the government's war against rebels.
In March 2000 BP Amoco purchased Burma Castrol, a maker of lubricants, for $4.7 billion. In late 2000 BP Amoco began removing the word "Amoco" from all nine thousand American stations. The worldwide cost of renaming all BP stations over 4 years was $4.5 billion. BP regained its Sidanco assets and bought a 25 percent stake in the company from Tyumen Oil, which had been renamed TNK. Although BP was the world's largest producer of solar cells, Browne said he believed hydrocarbons would be the most important source of energy at least into the 2010s. He believed solar power would not become truly important until as late as 2050. Browne viewed wind power as too unsightly and too noisy to be acceptable to consumers. Meanwhile he and the leaders of Ford Motor Company began talks about cooperating to produce cleaner automobile emissions. In Atlanta, BP introduced clean fuels and experienced a jump in its sales in the city. It was in 2000 that Browne's mother died.
In 2001 BP changed its logo to lowercase "bp" and a green sun to symbolize that BP was an environmentally friendly company. The company's motto became "Beyond Petroleum." At TNK Fridman wanted help building his oil business, so he and Browne began talks about merging. Since 1995 BP had established a process of exploring, building, and pumping that dramatically reduced costs. BP had 20 "hives," $500,000 rooms for three-dimensional images of drilling sites where drillers, engineers, and geologists gathered to plan drilling in a site. Use of this system shortened planning time from weeks to hours. In 2001 Browne was made Lord Browne of Madingley.
In 2002 Browne said he believed mandatory government standards were necessary to make oil companies control their emissions. On August 29, 2003, Browne concluded an $8.1 billion agreement with Russia's TNK. BP had a 50 percent share of TNK-BP (composed of Tyumen Oil and Sidanco), which produced 1.2 million barrels per day of crude petroleum in Siberia and the Ural Mountains. The deal increased BP's petroleum reserves 30 percent. BP assigned 110 of its managers to the new company, including TNK's chief financial officer and its CEO.
See also entry on BP p.l.c. in International Directory of Company Histories.
sources for further information
Fisher, Daniel, "Going Deep: How Sir John Browne Turned BP Amoco into the Hottest Prospect in the Oil Patch," Forbes.com, April 2, 2001, http://www.forbes.com/global/2001/0402/044.html.
Ghazi, Polly, and Ian Hargreaves, "BP's Chief Executive Is Making the Running on Green Strategy: But How Does That Square with Controversy in Colombia and the Atlantic Ocean?" New Statesman, July 4, 1997, pp. 34–37.
Guyon, Janet, "A Big-Oil Man Gets Religion," Fortune.com, March 6, 2000, http://www.fortune.com/fortune/investing/articles/0,15114,371800,00.html.
——, "When John Browne Talks, Big Oil Listens," Fortune.com, July 5, 1999, http://www.fortune.com/fortune/articles/0,15114,378121,00.html.
"Odd Man Out among the Oil Barons," Sunday Times, January 21, 2001, http://www.bpamoco.org.uk/company/01-01-21stim.htm.
—Kirk H. Beetz