With the Rio wedding off, BP is free to hire its new chairman

Chris Blackhurst
26 Nov 2008

"Peter will be a tough act to follow: he has extraordinary political connections and insight," said Tony Hayward. "Our principal contracts are with governments, and Peter has been immensely valuable there."

The BP chief executive went on to say that whoever succeeded Peter Sutherland as BP chairman had to be someone who had worked in the energy business, who had experience at the top of a big multinational, and who was comfortable dealing with governments at the highest level. "So the list is quite short," he said.

The City thinks it knows the identity of the next chairman: Paul Skinner, currently chairing mining giant Rio Tinto. Yesterday, that possibility moved a step nearer with the news that Australian rival BHP Billiton was calling off its proposed union, worth £170 billion at the time, with Rio Tinto.

Skinner, 63, was due to leave Rio Tinto after two successful terms at the Anglo-Australian corporation but had postponed his departure until the BHP Billiton situation was resolved. Now it has been, resulting in victory for Rio Tinto, he is free to go as planned at the end of the year.

Sir Ian Prosser, the BP deputy chairman, who is heading the search for the new boss, is thought to want him. Skinner is also understood to be keen but no discussions about personal terms have taken place.

With BHP Billiton pulling out, the process should quicken. For Skinner, the BP chair would represent a double coup. Not only is it regarded as one of the plum jobs in British and world business, but he spent nearly four decades working for its arch-competitor, Shell and was disappointed not to be made its chairman in 2000.

Such is fate, however, that being passed over in favour of Sir Philip Watts could well turn out to be the best thing that has ever happened to him. While Watts subsequently became engulfed in the scandal over Shell's misreporting of its reserves, Skinner went on to Rio Tinto.

Skinner grew up in Essex and went to Palmers School in Grays. He's very tall and was a keen footballer, gaining a blue from Cambridge. Today, if he has a team, it's West Ham. Even now he keeps himself fit, going jogging with his wife, Rita. They have two sons and live in west London - they have other houses in Hampshire and France.

At parties, they make a contrasting couple. He is courteous and quiet -- which, with his height, can make him seem imposing to those who don't know him. She is much shorter and talks nineteen to the dozen, often abou t her love of theatre (she is heavily involved with the National). He is also keen on the arts, especially opera.

"Rita is a good foil to Paul," said a friend of them both. "She's a very bright lady. Even if he wanted to, she wouldn't allow him to take himself too seriously. They don't do airs and graces - they're both very grounded."

Once he lets go of his customary reserve, Skinner can be warm, with a good sense of humour. He is also sharp - a fellow board director said that he cuts an impressive figure in meetings and can usually be relied upon to ask challenging, incisive questions. Skinner likes to say that he joined Shell on his very first day at university. The oil company paid for him to read natural sciences, although he later switched to law.

He stayed with Shell after he graduated, taking his wife and young family to postings across the world, in New Zealand, Greece, Nigeria and Norway, fulfilling a childhood ambition to "live and work in as many countries as I could". His last job was running the oil major's "downstream" business, an operation that covered 80,000 employees in 140 countries.

There are those who wonder whether, if he'd become chairman and not Watts, Skinner would have been caught up in the reserves affair. In Skinner's defence, though, are that his primary concern was refining and distribution, not "upstream" exploration and production, and he is an absolute stickler for correct governance. More probable is that if he had been in charge, the whole sorry saga might not have occurred in the first place.

Skinner prefers not to talk about it - he's far too diplomatic to accuse anyone, preferring to dwell on the positive aspects of Shell, a company he was with nearly all his working life.

Not that he's had it easy at Rio Tinto.He joined the mining company's board in December 1991 and was made chairman in November 2003. Under Sir Robert Wilson, the long-time chairman and chief executive, Rio Tinto had acquired a reputation for being conservative and inward-looking.

It was gaining too, a patchy environmental history. Other mining operators were more modern and faster-growing - and reaping the benefits of soaring world demand for commodities. Against them, Rio Tinto was in danger of exuding a tired, clapped-out, air.

Rather than taking on a sinecure to last him out his days, to the surprise of many, not least at Rio Tinto, Skinner threw himself into the new post with gusto. He put a marker down at the outset by declaring he didn't want to be non-executive or part-time chairman but "chairman", believing that was a more suitable title for the demands of chairing a modern global company.

He set about controlling costs, which had been rising. Rio Tinto has grown through acquisition and there was a feeling of the component parts of the company not being knitted together, of the whole place not being run as efficiently as it could be.

Underperforming sections of the empire were brought up to scratch or disposed of altogether.

He fostered links with Russia and China (he also sits on the board of Standard Chartered bank, which has close ties to China), displaying a rare patience and understanding. "Think global, act local is a hackneyed phrase, but it does reflect our aim," he said.

Always, he acted with charm. "It's in his DNA," said an adviser. "He's a combination of extraordinarily charming and the urbane.

"He can ring up and say, 'I'm so sorry, is now a good moment to talk?' And I will think, 'Of course it is, given what you're paying us.'" Added the adviser: "He's a very calm person. I've never heard him raise his voice. It can sometimes have a controlled irritation and a controlled annoyance. He can be very firm if he wants somebody to do something and they don't - but I've never seen him lose his temper."

Before he arrived, Rio Tinto had a lacklustre environmental and human-rights record - Friends of the Earth accused it of being "abysmal" in Indonesia. The company had been fined for health-and-safety breaches and it was accused of turning a blind eye to climate change.

Applying the lessons he had heeded at Shell, where the oil firm (along with BP) had been quick to grasp that if it failed to obey best practices it would be a natural target for protesters and could even forfeit lucrative licences, he shifted Rio Tinto's outlook. It went from being loathed to even earning green plaudits.

Of course, Skinner did not do it on his own. He's assembled a formidable board and he worked with Leigh Clifford, the chief executive, and then when Clifford retired, he promoted American Tom Albanese to the job. Within two moths of taking charge last year, Albanese had pulled off the $38 billion purchase of Alcan of Canada, making Rio Tinto the world's number one aluminium producer.

No sooner had the celebrations faded, than BHP Billiton launched its bid. Led by new boss Marius Kloppers, the Australian company was aggressive, making what many believed to be a good offer.

However, Skinner was not entirely impressed. His mantra was "value, value, value" for the shareholders. "If the price had been right, Paul would have been the first to recommend it," said the adviser.

Some pressed Rio Tinto to merge on the basis that together the two companies would create one of the top five corporations in the world, an unstoppable force in mining and metals. Bigger, they said, was bound to be better.

Skinner was unmoved by that claim. "He looked at the deliverability, at other big deals that had gone wrong, like those at Citigroup and Royal Bank of Scotland," said the adviser. "He was concerned in case that also happened to Rio Tinto."

Skinner said: "I could give you a number of examples of companies that have grown to be very large and have found it more of a challenge than they thought. We all need a little humility about operating very large businesses. You have to be sure you have got the managerial capacity to deliver."

BHP Billiton got personal in some of their attacks on Rio Tinto. Skinner and his colleagues maintained a determined silence. The Australians painted themselves as racy and edgy, their target as old-fashioned and fuddy-duddy. But it was BHP Billiton that folded its tent yesterday. And it looks as though BP has found a new chairman.