ALEX BRUMMER: New BP Boss Bernard Looney bins the old ways

Looney bins the old ways: New BP boss has hit the ground running with his radical carbon zero pledge, says ALEX BRUMMER

Bernard Looney has hit the ground running as chief executive of BP. Proposals to get the company to carbon zero by 2050 are bold. 

None of the other oil majors has been so radical, although Spain’s Repsol is moving in the same direction.

Among the most profound changes is that BP is taking responsibility for customer emissions too.

Slick move: New BP Boss Bernard Looney is abolishing the historic BP structure which separates upstream exploration and production from downstream distribution and sales

That could be irrelevant in the UK, should plans to get new diesel, petrol and hybrid motors off the roads within 12 years be implemented. 

To achieve the new goals, Looney is abolishing the historic BP structure which separates upstream exploration and production from downstream distribution and sales.

He is building four new groups, each with the goal of more transparent carbon reporting and delivering on the reduction and elimination of emissions, and alternate energy sources. 

On paper it all looks hunky-dory, but it will never please the green lobby which regards oil companies with the same disdain and horror as tobacco peddlers.

The new BP strategy has a familiar ring. Almost two decades have passed since former chief executive John Browne made ‘Beyond Petroleum’ the BP slogan and introduced the sunburst logo.

Around the same time, he was doubling down on oil by buying up US producers Amoco and Arco. 

After some heavy-handed cost-cutting, BP was hit by the fatal Texas City refinery explosion in 2005 followed by the Deepwater Horizon catastrophe in the Gulf of Mexico in 2010.

Looney’s predecessor Bob Dudley spent a decade steering the enterprise away from near-bankruptcy and back to safer ground.

Among his biggest deals was to consolidate BP’s Russian interests by becoming a 19.75pc minority holder in the Russian behemoth Rosneft. 

It is hard to see how that can ever be consistent with its climate change aims. But the market has given BP the benefit of the doubt over the new objectives and moved the shares up 1 per cent.

The £95billion group has stolen a march on rivals. But delivering on some very precise numerical objectives will be a struggle.

Going West

Plumbing group Ferguson is no Unilever. Yet it is a British champion, and is the world’s biggest plumbing distributor. 

Last year, under pressure from US activist Nelson Peltz, it did the splits, spinning off its historic Wolseley brand as a separate FTSE 350 firm from its bigger US operations.

Now we learn that Ferguson is exploring leaving the FTSE 100 and shifting its listing to the US. Having done the splits, much of the group turnover is on the other side of the Atlantic.

Ferguson’s chairman Geoff Drabble and recently installed chief executive Kevin Murphy need to bear in mind its history.

It was mainly UK shareholders who funded the old Wolseley’s expansion into the US in the first decade of the 21st century. 

The same investors kept faith by supporting a rights issue when Wolseley nearly came a cropper in the US housing crash at the core of the financial crisis.

Long-term investors should feel aggrieved if Ferguson, now a £17billion firm with big exposure to the US, were to kiss Britain goodbye as it enters a new era outside the EU.

Ferguson’s corporate brokers might care to remind the board of what happened at other UK-quoted firms which looked at moving their share listing abroad.

In 2018, Paul Polman at Unilever wanted to shift the quote to Rotterdam. After a vigorous media campaign and strong opposition the group dropped the idea. A few months later Polman stood down.

Last year, medical equipment and prosthetic limbs supplier Smith & Nephew proposed a move to the US at the behest of its chief executive Namal Nawana. 

He was aggrieved that he was not paid enough and reckoned he could pocket much more in America. Investors rebelled and after just 17 months Nawana was on his way.

Many UK fund mandates require the companies in which they invest to be quoted on the London Stock Exchange. 

If the listing is moved overseas the fund managers are required to disinvest – a good reason why Ferguson should not do a runner.

Soft spot

Is Masayoshi Son’s Softbank, owner of Cambridge tech champ Arm Holdings, the new Woodford?

The group values its assets at £175billion but shares trade at a 52 per cent discount. Ehhhh!


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