• Wednesday, February 28, 2024
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BusinessDay

Knowing when to dive down into the detail

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Chris Finlayson was not long into his new job as chief executive of BG Group when he sold the company plane. The FTSE 100 oil and gas group now charters space on a business jet in spite of its 57-year-old boss’s gruelling schedule, which involves spending a third of his time shuttling between its head office in Reading and operations in Australia, Brazil and Tanzania.

It was not the most important thing Mr Finlayson has done since he took the helm almost exactly a year ago. But it might say the most. Mr Finlayson has set a new tone after the retirement of Sir Frank Chapman, his long-serving predecessor and architect of the company’s rise into a global energy player.

In his first in-depth interview since taking over, Mr Finlayson admits management style – Sir Frank’s was “autocratic” and “hierarchical” according to critics – was “probably the thing I thought about most”.

“I was well aware of what Frank’s character was like,” says Mr Finlayson, carefully. “I strongly believe you’ve got to be genuine, be yourself.”

He was recruited by Sir Frank in 2010 after more than 30 years at Royal Dutch Shell, where he had to deal with trouble spots such as the Niger delta and the Sakhalin gas project in Russia. He spent his first six months as chief executive of BG on the road and wants “to be as non-hierarchical as possible”. A big part of it, he says, comes through in how staff see the interaction between members of the leadership team.

“Do they see you acting as a team as opposed to a dirigiste boss telling others what to do?” he says in his office in Reading.

A burly man with a neat beard, nursing a small limp from a recent hip replacement, Mr Finlayson is the new frontman but the top team has also changed. Simon Lowth, formerly at AstraZeneca, has joined as chief financial officer. Sami Iskander is the new chief operating officer, replacing long-timer Martin Houston who remains as a consultant until the end of 2014. His departure had been widely predicted after he lost out to Mr Finlayson for the top job.

A seasoned operator, Mr Finlayson exudes a calm, almost unflappable air but the past 12 months have proved a rocky ride for BG investors. Soon after taking over on January 1 2013, Mr Finlayson warned production could fall this year and extended the timetable for when BG expects to reach its ambition of producing 1m barrels of oil equivalent per day beyond the previous target of 2015.

The previous October the company had shocked the market by warning investors not to expect any production growth this year. In May, Mr Finlayson unveiled his strategy for the group, saying he would be more cautious about giving long-term production targets and focus more on value over volume.

In the past, he says BG has “lost value and opportunity” by having a single-minded focus on production growth. As a result, the quality of that growth and the value of its liquefied natural gas business were “overlooked” by the market.

“The jam tomorrow approach was definitely not going to work,” he says. Now the strategy is “show me”, with a focus on near-term delivery.

The coming year is critical. Success in bringing crucial assets into production – notably in Australia and offshore Brazil – could determine how Mr Finlayson’s tenure is viewed. He needs to guide BG’s move from a fast-growing explorer into a leading producer with good prospects to find new oil and gas fields, while convincing investors the company is not turning into another “supermajor” with lacklustre production growth.

Mr Finlayson is adamant he will not turn BG into another Shell. While the company needs some of the same controls and structures of a Shell or an Exxon as it grows, he wants it to act “like a small company with the financial power of a large one”.

“We lose one of our natural advantages if we start to behave like a supermajor,” he adds.

It is his operational experience of some of the industry’s toughest projects that helped him secure the top job. Andrew Gould, BG chairman, says the board gave him the job as he had “the clearest and most robust strategy and a huge amount of experience relevant to the current phase of BG’s development”.

Hailing from a family of teachers – Mr Finlayson’s wife, whom he met in Brunei, was also one – he joined Shell straight from university in the 1970s. Unlike his peers, who jockeyed to go to exotic countries such as Oman and Brunei, he opted for Aberdeen after six months of training; the Scottish city was then booming as the first generation of big fields began to produce in the North Sea.

Stints and promotions in Oman, Turkey, London and Nigeria followed. It was all “very command and control”, he says, with people going to where they were put. His first general management role came in 1996 when he was made general manager of Shell’s central business unit in Aberdeen. Subsequent roles saw him take on some of the group’s most challenging and politically sensitive projects – notably in Nigeria and Russia.

Malcolm Brinded, the former head of exploration and production at Shell, is a former colleague of Mr Finlayson’s. While at Shell, he says the BG chief took “direct personal command in some tough situations – especially when security worsened in the Niger delta in 2004-05, with hostage-takings increasing and shootings of Shell and contractor staff”.

During his five years in Russia he was embroiled in the battle for control over Shell’s Sakhalin LNG project with the government and Gazprom. He used to swap notes with Bob Dudley, the current CEO of BP and at the time head of TNK-BP, the company’s joint venture with a group of Russian oligarchs. Unlike Mr Dudley, however, he says he never felt personally threatened and he and his wife eventually left Russia reluctantly.

Russia helped teach him that one of the challenges of leadership is that you cannot know every detail of every project “or you will die in the process”. The pipeline infrastructure for Sakhalin 2 alone comprises 300km of offshore pipes and 1,600km of onshore pipework.

That said, every two or three months he used to go to Sakhalin and, together with the project’s CEO, make sure that what was being reported to them was accurate. The trick is knowing when to dive down into the detail and head off problems, he says.

“You have to stay at a sufficiently high level to understand what is going on right across the business, while having a sense of intuition [to know] there is something here that makes me worried.”

• Culled from FT