O’Neill is oiling the wheels: But can BP’s first female boss get the business back on
Oil company profits are always controversial. It is entirely predictable that BP should be accused of making a mint at the expense of motorists after it reported unexpectedly large earnings.
Campaigners, some of whom have a gift for invective, claim the company is ‘wallowing in a nascent cash windfall’ due to the conflict in the Middle East and has been guilty of ‘opportunistic profiteering’.
But beyond that row there are other issues that should interest BP investors, and that includes pretty much anyone in the UK with a pension or an equity ISA.
Foremost among these is the strategy being put in place by newly arrived boss Meg O’Neill, who took over at the start of this month.
She is the company’s first female chief executive. As an aside, the number of women in top positions at BP is notable in what was once the ultimate in macho industries.
As well as O’Neill, the roster includes finance boss Kate Thomson, trading chief Carol Howle, who is also deputy chief executive, and senior non-executive director Dame Amanda Blanc, whose day job is running insurer Aviva.
New direction: BP boss Meg O’Neill, pictured, became the first female chief exec in BP’s 117-year history when she took over this month
Following Shell’s announcement this week of its biggest takeover in more than a decade, O’Neill is far less likely to be facing a bid from BP’s arch-rival, a scenario that has been a persistent feature of the City rumour mill.
She is dismantling an unwieldy structure put in place as part of an ill-omened push into green energy by former boss Bernard Looney, who was ejected after a scandal over his personal relationships.
Her plan is to revert to a streamlined upstream/downstream structure, a move that will please activist investor Elliott, which wants BP to look and perform more like US rivals such as Exxon Mobil and Chevron.
BP’s reliability figures are in danger of being overlooked in all the hoopla. These numbers, which are the real gauge of how well the business is running, have improved significantly for upstream and downstream operations.
This is encouraging: faced with all manner of risks they cannot control, not least the one-man chaos machine in the White House, the onus is on Big Oil bosses to run their operations as dependably as possible.
O’Neill’s predecessors had various lofty catchphrases such as ‘beyond petroleum’ and ‘reimagine’.
Hers is straightforward, which is always a good sign: to make BP ‘simpler, stronger, more valuable’. Now she needs to do what it says on the tin.
Casting shadows
Barclays’ admission that it has a £66billion exposure to private credit, shadow banks and the like in its results presentation yesterday is disturbing.
It is not the figure itself that creates the unease so much as the fact that the bank felt the need to make the disclosure at all.
The boss, CS Venkatakrishnan, says he is retreating from riskier asset-based lending after losses on Market Financial Solutions.
Depressingly, the bank also had to earmark another £105million to pay compensation to customers in the car finance scandal. The banks never seem to learn.
Profits were up, despite the write-offs. The general view in the City and Wall Street, at least in public, is that the dangers of private credit are contained and that it is unlikely to spark a repeat of the 2008 Great Financial Crisis.
Those of us who were there remember that risks were being downplayed in the run-up to that meltdown, so the emollient words do not necessarily reassure.
As Bank of England governor Andrew Bailey has said, private credit is an opaque sector and it is hard to assess where the dangers lie and how far they extend.
The financial system, which has been subjected to much tighter regulation since that meltdown, is said to be stronger and better protected.
One of the lessons of that period, however, is that problems in seemingly obscure backwaters can create contagion in unexpected ways.
Windfall taxes
It should be a good thing to see two of the country’s leading businesses making healthy profits, but one element uniting BP and Barclays is likely to be calls for fresh windfall taxes on banks and oil companies.
Businesses face a hefty tax burden as it is. Profits in banking and oil are volatile.
Energy companies operating in the UK are subject to a windfall tax brought in by the Tories in 2022 and not scheduled to be lifted until 2030. Enough already.
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