British businessman John Browne, who turned BP into an oil supermajor through a series of acquisitions over a dozen years as chief executive, revealed in his memoir in 2010 how close he came to the deal he really coveted.
The Baron Browne of Madingley met his then opposite number at Shell, Jeroen van der Veer, at Lake Como in Italy in 2004, three years before he resigned, to discuss the possibility of a merger, he wrote. That was before the board of BP, then led by Irish man Peter Sutherland, blocked the plan.
Twenty-one years later, reports emerged in recent months that Shell was considering making an offer for BP Shell, whose £157 billion (€180 billion) market value is not far off three times that of its historic arch-rival, would deny in late June that discussions were taking place.
But the fact that it was even given credence by the market – BP’s shares rose as much as 12 per cent in eight hours of heightened speculation – underscores how much the one-time top dog on the FTSE 100’s fortunes had ebbed.
[ BP appoints Irishman Albert Manifold as new chairmanOpens in new window ]
Will the appointment on Monday of another Dubliner, former CRH boss Albert Manifold, as incoming chairman help reboot the engine? The muted share price reaction – with the stock dipping a little over 1 per cent this week – suggests he has his work cut out.
Manifold, who is due to take charge of the board in October, is joining the group after a tumultuous few years.
Chief executive Murray Auchincloss moved in February in an investor day to scrap plans by his predecessor, Kerry native Bernard Looney, to put BP on the greenest path of any oil big. Looney had aimed to increase renewable energy generation 20-fold over this decade.
Instead, BP now plans to hike its investments in oil and gas by about 20 per cent to $10 billion a year, while decreasing previously planned funding for renewables by $5 billion a year to $2 billion. Auchincloss, who took charge in 2023 after Looney was fired for misleading the board over colleague relationships, said the energy giant had gone “too far, too fast” in the transition away from fossil fuels, and that its faith in green energy was “misplaced”.
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The reset was inevitable, following profit declines at BP in 2023 and 2024 and a sustained period of share price underperformance compared to peers. The leaking of news in early February that feared activist hedge fund Elliott Management had built up an almost 5 per cent position in BP, and that it would push for the business to abandon its commitment to green energy, added to pressure before the investor day.
[ Manifold bows out of CRH after almost 400% share price surgeOpens in new window ]
BP is not alone. The likes of Shell, France’s TotalEnergies, Eni of Italy, Oslo-based Equinor, and ExxonMobil in the US, have all scaled back their green ambitions in recent times to focus more on higher-margin fossil fuels, as inflation and a spike in interest rates hit the economics of renewable projects.
The International Energy Agency said as recently as two years ago that there was no room for oil, gas and coal activities if the Paris agreement of limiting global warming to 1.5 degrees Celsius was to be successful. Yet its executive director, Fatih Birol, has since taken a different stance. As political and business leaders grapple with the energy trilemma – tending to often contradictory aims of energy security, affordability, and decarbonisation – Birol said in March that there is a need for investment in fossil fuels “especially to address the decline in existing fields”.
In the near term, however, depressed oil prices pose a challenge for oil giants as investors put a priority on dividends and share buy-backs. Brent crude prices have fallen 10 per cent so far this year to about $68.50 a barrel, amid higher output from the Organisation of the Petroleum Exporting Countries and its partners and worries that the Trump administration’s trade policies will dampen global demand.
BP agreed last week to sell its US onshore wind business to local electricity transmission systems operator LS Power for an undisclosed sum, as part of a $20 billion disposals strategy over the coming years to simplify the group and lower debt.
It’s not confined to just green assets. The 120-year-old group also signed a deal earlier in the month to sell its 300 Dutch petrol stations. And it is marketing its Castrol motor lubricants unit – though bids are said to have come in at $6 billion-$8 billion, well off initial hopes that it would achieve $10 billion.
Followers of Manifold will expect him to push for a fresh review of the group’s asset base. He drove a doubling of CRH’s earnings margins during his 11 years in charge – selling $14 billion of underperforming or unwanted assets in the process, while spending $25 billion acquiring others. It turned CRH from a seller of cement and other base materials into full-scale construction services, where it has much greater pricing control.
CRH also spent $8.5 billion buying back its shares over the past seven years. Its share price has jumped by almost 80 per cent since Manifold moved its main listing to New York in September 2023 – ditching its Irish quotation in the process. Could he also seek to replicate this with BP? Wall Street investors, after all, are less concerned these days about ESG (environment, social and governance) factors than those on this side of the Atlantic.
There will be no sacred cows with Manifold at the helm of the board.
Manifold’s record in his final years at CRH won an unlikely fan in Europe’s largest activist fund manager, Cevian, which originally turned up on CRH’s shareholder register in 2019 with a list of gripes against the company.
“Albert was an excellent and highly shareholder-value-focused CEO. We shared a common goal in making CRH better and more valuable, and we enjoyed working with him,” said Cevian founding partner Christer Gardell in a statement to The Irish Times.
“He isn’t a conventional UK plc box-checking guy. But if you want a chair to steer value creation, he seems a great appointment.”
