BP is a genuine puzzle. How can an enormous company of considerable long standing with some seriously impressive attributes, be so maladroit in its senior appointments? With the summary eviction of Mr Manifold[1], BP will have had 3 chairs and 5 CEOs since 2020, and a heap of embarrassment. This is a crazy level of volatility at the top.
It's not a company I have definitive views on; but inevitably I have had loads of dealings with them over my decades in the industry. (They offered me a job once: but I didn't want to move to Japan.) Here are some observations.
- Although superficially they might all look pretty similar, big multinational oil companies aren't remotely all operating under the same business model. We can map out a spectrum. At one end we have Exxon - fundamentally centred on building and managing physical assets; i.e. engineer-driven, and deeply suspicious of finance & trading activity, which it minimises very purposefully. At the other end, BP - plenty of capable engineers and physical assets, but also exceptionally capable and commercially active traders and finance types. At these two extremes on the spectrum, the respective P&L and balance sheets aren't very similar.[2]
- BP has shown itself somewhat prone to accommodating the woke agenda. The 'Beyond Petroleum' rebrand dates as far back as 2000, under the proto-scandalous John Browne[3], so that until recently the eco-'green' stuff was fairly prominent in the business, almost as much as the traditional 'green stuff'. They have also made several 'questionable' appointments of females at very exalted levels, IMHO for the sole purpose of having wimmin in senior jobs because at least a couple of them are self-evidently not up to the job.
- More generally, they seem to hire outsiders for top jobs far more than is usual in the industry. Really confident big companies of long standing place far more trust in promotion from the ranks of their long-term employees - rightly or wrongly. [4]
- However, the boardroom nonsense of all kinds clearly hasn't been at the expense of their trading prowess. And overall, I have a fair degree of respect for the senior working-level management of the company across the board, who mostly seem to get on with business in an intelligent and competent way.
All that doesn't lead me to any firm conclusions about BP's future. But the company has been such a major part of the UK business scene for so long, I have to believe many C@W readers will have well-informed perspectives on the company. So - the floor is yours.
ND
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[1] Cue the obvious jokes about Manifold sins and wickedness ...
[2] Shell, incidentally, is pretty much bang in the middle
14 comments:
When I was a final year undergraduate I applied to a dozen firms for a job. Only BP didn't offer me one. I phoned. "Awfully sorry, we seem to have lost your application, would you like to complete the form again and we'll give you an interview?" Ho bloody ho.
Later on I had dealings with BP Chemicals - no complaints there.
"several 'questionable' appointments of females at very exalted levels, IMHO for the sole purpose of having wimmin in senior jobs"
Certainly not a phenomenon restricted to the oil industry...
Expanding a little on that, I'm never sure of how much diversity mania is the result of pressure from government, who even in the UK have ways of bending others (see the mandatory "full-scale invasion" in every paper) , or whether it's true religion indoctrinated at university.
Example, the frequently stated "diversity improves business performance" - perhaps true in a few fields for operational reasons, yet why in WW2 would Russia tend to strike, not directly at weaker Italians, but at the junction between German and Italian troops?
I don't get the impression that the House of Rothschild made its money by embracing diversity... not sure about Goldman Sachs either. Quite the opposite.
As befits a capitalist, I'm absolutely empirical on diversity, and have decades of experience & practical examples to draw on:
> there are circumstances where having a new (intelligent) perspective can be extremely valuable
> there are circumstances where cohesion and single-minded purpose are extremely valuable
> any intelligent organisation will try to balance these appropriately to their needs
BUT there is no 'scientific principle' or 'well-established data' showing diversity to be beneficial per se, in its own right, for its own sake, as some kind of Public Good.
I have twice been passed over for reason of "we need a woman in that job". On one occasion (promotion into the next available slot at the higher rank) I was glad of it very shortly after, because the next opportunity that came along suited me very much better.
On the other (an NED post), I was heartily pissed off, having been already selected by the (non-exec) chair and, I thought, the CEO. The only saving grace was that the women they took on instead was utterly useless and they let her go within the year. They were, I guess, too embarrassed to approach me again.
Diversity of thought is what is required in business. Or, put another way, avoid corporate group think.
That diversity doesn't need to be from Venus, different ethnicity or one of the various alphabet people.
See this 2013 DoD report, just published - "Strategic Consequences of Chinese Racism" .
The unknown but guessed at author says that to the Chinese:
The United States used to be a strong society that the Chinese respected when it was unicultural, defined by the centrality of AngloProtestant culture at the core of American national identity aligned with the political ideology of liberalism, the rule of law, and free market capitalism. The Chinese see multiculturalism as a sickness that has overtaken the United States, and a component of U.S. decline.
I'd disagree slightly in that the US has been in decline pretty much all my working life - from 1973 when I was first impressed by the excellence of US machine tools and lab analytical equipment, it's all been downhill DESPITE the US invention of modern electronics. Multiculturalism was just a babe in the arms of some sociology departments then.
link to the report
https://xcancel.com/s_decatur/status/1490408671779729425
xcancel is a site that gives non-x subscribers a view of all posts
On diversification (of business, not DEI!) it’s a tricky one.
Yes, you shouldn’t generally deviate from your core areas of expertise and where you get most of your revenue from. Most of the sprawling conglomerates (like Gulf & Western) got broken up and made several smaller but better businesses.
That said, it’s always worth taking a punt as BP has done often successfully in the past.
One area where it makes sense is hydrogen. Yes, yes, we’ve done hydrogen to death and it has a long, long list of “why nots” including dismal thermodynamics (I’m talking about hydrogen from electrolysis using “surplus” renewables output here, to avoid confusion).
It might end up a dead end. But high grade heat available without dependence on fossil fuels seems to have some future, albeit way off and fraught with risks.
But if hydrogen becomes important then it will need scale. BP knows how to scale fossil fuel production, transport, storage and distribution. Skills will need to be acquired and this will mean real world experience (not buying in drek from consultants winging it).
Anyhow, I might be wrong. But it doesn’t seem too much harm to give it a go for BP.
BP giving it the big marketing and investor relations push here https://www.bp.com/en/global/corporate/what-we-do/hydrogen.html
In my lab days I used hydrogen, you need a pretty solid cylinder. otoh oxygen is worse, don't have any oil anywhere near it - difficult in an oil refinery!
need very leakproof pipes, too - very small molecules that go bang when mixed with air and ignited. This guys not a fan
https://www.philiprsteele.co.uk/hydrogen-versus-methane-aka-natural-gas/
I'm not a fan of the economics of H2
(I always assume clever engineers can solve the practical problems. Electricity is pretty dangerous, too ...)
Clive, I agree that doing things reliably & at scale is one of the massive strengths of Big Oil. It's why they love the idea of 'carbon capture & storage'. And H2 as well, if it made any sense ...
"I always assume clever engineers can solve the practical problems."
Aye, but not for tuppence.
I can't see there being one form of hydrogen storage, given it's awkwardness it's going to have to be situational.
For example, hotter latitudes could probably use metal hydrides and solar furnaces for cost-effectivish grid use, but no one is lugging those around as a battery.
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