Lord Browne - Chief Executive BP, 1995 - 2007 HARDtalk


Lord Browne - Chief Executive BP, 1995 - 2007

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years. Time for HARDtalk welcome to

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HARDtalk. My guest today made his name and fortune in the oil

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industry, and in the process became one of Britain's best known

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business leaders. Lord Browne was BP's boss for 12 years where he

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expanded and diversified one of the world's fossil fuel giants. He's

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back in the thick of the energy debate, backing a company eager to

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develop shale gas production in the UK. His career has been defined by

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the search for fossil fuel and economic sustainability. Can we

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Welcome to HARDtalk. Thank you.It strikes me that you spent pretty

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much your whole professional life in the quest for fossil fuels. I

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wonder now, looking back on a long career, whether that is a source of

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absolute pride for you or whether you feel somewhat ambivalent about

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it? I am very proud of it because fossil fuels have enabled all of us

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to do far more than we could have done without them. They, like

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everything else, have a good side and a dark side, but I am very

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proud of the fact that I have helped bring energy to a lot of

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people in the world. But unleashed the dark side as well. Absolutely.

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I have recently written a book about seven elements. Every element

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has a dark side and a good side. Richard Feynman, the great American

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physicist, said every man is given the keys to heaven and the same key

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opens the gates of hell. And I think this is true with the

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elements, particularly with carbon. It brings pollution, issues of

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global warming, greed, corruption, all of these things. But equally,

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it brings heat, light, mobility. You can read at night, stay warm in

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cold climates and warm -- hold in warm climates and you can do

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extraordinary work. And it fuelled the industrial revolution. It is

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why we are all sitting here. That amount of coal for a man of average

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weight can do the same amount of work as a man working for 100 days

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and that was the breakthrough. have already introduced a topic and

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one to get to, climate change. I am fascinated to remember that it was

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you in 1997 who was the first of the large oil chief executives to

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make a set-piece speech in which you said that there does appear to

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be a link between man-made carbon emissions and our changing climate.

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You were criticised by others in the industry, including the chief

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of Exxon at the time. Looking back, rather than speaking about it,

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could you have done more to change the situation? We did quite a lot.

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I never like going back to justify history but the reality is that the

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world cannot live without hydrocarbon fuels but we can mix

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them up with different things to reduce the amount of carbon week in

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it. For example, if we burned all the natural gas we had as reserves

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in the entire world today, we would only use 33% of what is called the

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carbon budget that we have to prevent the atmosphere, apparently,

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all the world are warming up to that levels. Let's be very clear,

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briefly and clearly, you believe that man-made climate change is

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continuing to happen and that it threatens to go beyond the two

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degrees centigrade rise that scientists posit is the threshold

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beyond which it becomes really dangerous. Like a scientist, I have

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to say I believe it because of probabilities but in the back of my

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mind, I do believe they might be something worse or something much

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better. Right now, temperatures not rising as fast as "of they should

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be". But yes, this is an issue and we should start taking precautions

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to make sure it does not happen. You were well known through the

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late 1990s and early to thousands for taking the p in a different

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direction. BP's standing for beyond Petroleum. You took decisions not

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to get involved in tar sand exploitation in Canada. You wanted

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to be the first green will company, it seemed. But we look at BP today

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and it must be concluded that will strategy has failed. Well, you can

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conclude what you want. What I was doing was tried to diversified the

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base of the company to make it sustainable for the future, to be

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involved in debates about itself. It is an uncomfortable feeling as a

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company to have other people debate your future without you been at the

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table where the debate is taking place. I wanted to do that and I

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wanted to have a variety of energy sources. And that, I think, was the

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right thing to do because nobody else was doing it at the time.

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with respect, it didn't work. BP has pulled out a solar energy, it

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is pulling out of wind energy in the US. It is going into those

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Canadian tar sands, some of the most polluting oil production

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facilities in the world. The peak has essentially made a series of U-

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turns since he quit. -- the company. If I may, it is not the world. I

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always thought BP was a very important company. But many people

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are doing different things that they were not to win the 1997. We

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have very large solar energy companies, wind energy companies,

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very large biogas companies. I know that because that is what I now do

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with part of my life. Speciality, if you will. Speciality following

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specialisms in the industry. Interesting answer. We will follow

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renewables further later on but in terms of BP, it is important to

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nail this because it is such an important company not just in the

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UK but around the world. Are you saying they are misguided in

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second-guessing the strategy you put forward? Not at all. Facts and

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certainties -- circumstances change. When they change, strategies change.

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Hang on, you were against Tas and exploitation, for example. As the

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chief executive of the company, if you were still running it, when you

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will we do not go into car sounds? When I was running it, it was very

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clear that there were better choices to be made that were

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cheaper and at less risk of being unsustainable in the long-term. If

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there are different choices to be made, you should be interviewing

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the present chief executive of BP. You sit here as the major financier

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-- major executive of a financier. Ethically as well as commercially,

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would you be interested in putting money in to a project like that

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today? Hypothetically because we have not done so, we would think

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about it. You would have no ethical problem with it in terms of your

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perspective on climate change? That if the sums add up, go for it?

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the end of, you only do business that can last. If we think it will

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not last and I think some of us won't, we may get to the point

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where some of this production may never be made because we may not

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need it in the way that is being conceived at the moment, then we

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would not going. I want to tap into your experience in one of the area

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before we get on to the future and what you're doing now and will take

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on the energy mix and the world economy going forward. One other

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aspect of leadership at the company and that concerns the balance

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between pushing the boundaries of technology and exploration and

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always maintaining a commitment to safety. Environmental safety and

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worker safety. Do you think you got that balance right? I think we got

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the balance to an extent right. There was one big event when I was

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the chief executive, which was the terrible accident at Texas City,

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which killed 15 people. And we learned from that day onwards that

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what we have to do to understand how to avoid small events that

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might lead to very large consequences. Today, they call them

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Black Swan events or a thick tail risk. That is where I was mostly

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focused for the last couple of years. It was not a Black Swan

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event, Texas city, was it? If one looks at the record, which I have

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done, there were orders that your company commissioned that talked of

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an intolerable risk situation. may, people did not understand the

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implications of the small events, the some of which... four people

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died in that plant the year before it blew up. Terrible. I realise

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that. But there were events that we did not fully understand. I am very

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concerned about that. There were so many different things to look at

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and different ways of explaining Texas city. We could catalogue them

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but it will not be worthwhile. The point is that we learned a

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tremendous amount from that. reason I wanted to go into that

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with you some what is that it seems to me that people around the world

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watching this will be asking a question - should I place my trust

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in the big oil companies today given their record over decades? Is

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there any reason as they push the boundaries of exploration, whether

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it is in deep waters of the Gulf of Mexico, offshore in the Arctic, is

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there any reason we should give them the benefit of the doubt when

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it comes to their commitment to safety and security of the

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Environment? Do you think the industry deserves the benefit of

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the doubt? Yes, I do, much like any other industry. Things are more

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challenging. People want to do more. The technology allows us to do more.

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Small events create a very big consequences. The same is true with

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the nuclear industry and the food industry, tracking whether or not

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people are eating what is on the label. The scaling of activity, the

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pushing of boundaries, that means there are risks. It is up to people

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to look at companies to say if they have the systems in place to reduce

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those risks. That is a very, very important thing to look at. Yes.

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Texas city. Then the fund a horse platform that nearly sank. The

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pipeline link in Alaska. All on your watch. And then, not connected

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with you at all, we also had Deepwater Horizon. For BP in

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particular, the last decade has been pretty disastrous. And I just

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wonder when you express confidence in the ability of the industry to

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get this calibration right, why you have this confidence. Partly

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because people learn from the tragedies of for the past. Do they

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really? I have given you a list and they still seem to be happening.

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think that they do, generally. They do, generally. I know that people

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try and learn internally. But I think that one has to look out the

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complexity of life today and say that actually, it is all very

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complicated and we need great people, great systems, great

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learning, and still it is the case that we worry. In the case of

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nuclear energy, for example, interestingly, people are terrified

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of nuclear energy but statistically, it is one of the safest, if not the

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safest, form of energy in the world. But people do read it because of

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the possibility of extraordinary consequences. -- read it. Quite

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right and the Fukushima nuclear plant told us that. As the

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threshold is pushed in the oil industry as well, you are reaching

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a point when the next major disaster might be very difficult

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for the whole industry to cover. Andrew George, who works for a big

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insurance broker, says that we are facing this landscape in the fossil

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fuel business that is perhaps the most challenging in the history of

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this industry. That I am sure about because people are getting more and

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more complex and more and more difficult because we are at the

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boundary. For give me for interrupting but other parts of the

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world you would not undertake exploration in because the risks

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are so high? For it would depend on who I am and how much technology I

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have and the nature of the people I have and whether I felt they really

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understood what they were doing. There are plenty of cases where the

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risks are too high. Deepwater is one of them. One final thought on

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the past. Russia. It fascinates me that you have such a story to tell

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about your business links with Russia. You're the man at BP who

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took the company into Russia in a big way. In 2003, you signed that

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symbolic agreement with tea and cake, the biggest investor in the

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entire country. And it all went wrong. It ended in acrimony, court

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cases. Bob Dudley was lucky to get out of the country without facing

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prison. Do you think you got Vladimir Putin's Russia run as

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It became a regarded as one of the best oil companies in Russia.

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Increasing production, creating new jobs, having better people but it

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in the end, it lived its life and it started at small and finished be.

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BP gained a tremendous amount of value from it. Would you go back to

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Russia? I read if you have been wooed? I AM and wooed by lots of

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people. To do business in Russia if you need to be like BP. You need a

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thick skin. It is not long ago we had William, a big fund manager in

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Moscow, who fell foul -- fell foul of the Russian authorities and he

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said it he warned to steer Clear off Vladimir Putin's Russia. I was

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there some time ago. Provided you were doing things which will pure

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and simple, for the best that of Russia and your benefit, and you

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never changed strategy, you can get things done. That is exactly what

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with it. We got things done in a way which we're quite proud.

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you ever compromised ethically? I find that surprising given what

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we know about the way business is done. We ran business with a set of

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rules and ran up clearly and simply. Whether or not people around us

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were breaking rules, that I do not know but as far as BP was concerned,

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we ran it in a very at the Galway. I promise I want to talk about the

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future as well as the past. The way you left BP in at 2007. You now

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work with private equity funds looking at the energy business and

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opportunities. One such opportunity you are excited about his fracking.

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The hydraulic fracturing prices which can lead to enormous

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resources of gas being unlocked. Do you believe that he's a game

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changer or as we discuss the future of the energy business? I do not

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have to believe march. I just have to look at what is happening in

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America and, indeed, it has changed the game in America. Seven years

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ago, most people thought that America would run out of natural

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gas and would have to import liquified gas from places like

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Nigeria. That has not happen. Plenty of people built terminals to

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receive this gas which I'm not going to be used. The reason for

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that is the impact of hydraulic fracturing initial rock and the

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production of gas. He now represents 30% of the gas

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production of the US. It will probably rise. It has unlocked a

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huge amount of reserve all-over the US. That was brought not by modern

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technology. Fracking, again, I point out in marble, was invented

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just after the American Civil War by Colonel Robert. It was a

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combination of things that allow things to open up. One a great

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entrepreneur and drove it until it was successful. You talk about the

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book and in the book you acknowledge the fossil fuel

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industry will eventually die, not because we run out of fossil fuel

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but because the price context, demand, or technology, will move on.

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That's right. So why not acknowledge, and given the

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conversation earlier about climate change and your concerns about it,

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acknowledge that it would be very wise to take a decision to leave a

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significant reserves of fossil fuel, including these shall gases in the

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ground and concentrate on a renewables, on and on carbon-based

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fuels that will give us a clean future? Because it probably will

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not happen like that. If you leave gas in the ground in one country,

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it will come from another country or, worse, or call will be burned

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instead. That is simply a counsel of despair. We are trying to win

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this battle against man-made emissions. So we might as well just

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make money while we can. I believe that to be wrong. You can replace

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the heavier, more heavy carbon fuels with lighter carbon and are

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so gas will make a big difference as we go for what, lightening the

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load of a CO2 produce into the atmosphere. That is your conviction.

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You Gerrick company in the UK called Craig Treloar which wants to

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push the technology forward inside the United Kingdom. You have a big

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problem because in north-west England, we have an exploration

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site and in the south of England, local communities simply do not

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want heat. That is not wholly clear. The local communities wanted under

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certain circumstances. Well, I do not know how many public meetings

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you have been to but one protester I saw said you were basically

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trying to industrialise England's rural landscape and many others

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seem to feel the same way. I read the same quote. Surveys of the

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local population, particularly around Preston,... In the north-

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west where you already have subtly in plays but you had to suspend

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operations because of tremors... had to understand what was going on

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and stop it from happening again. It is a matter of doing things in

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the right way. This will be beneficial for communities. It is

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something that can be done that has not impact communities in a very

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bad and disturbing for destructive way. Have you seen the film, Gas

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land. The director claims 65 of the compounds used in fracking a

:21:41.:21:46.

significantly hazardous to human health. You except that? You can do

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fracking with different to what and you can do it with very benign

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additives. That is where people are today. We have very clear that when

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we do this activity, we announce exactly what we are put inside the

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rocks and what is coming back. you a rational optimism about the

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future? It strikes me you have been on a real journey from beyond

:22:11.:22:16.

Petroleum and complete rebranding BP as a Green company. Ewen now

:22:16.:22:21.

keen to make money out of different fossil fuel projects. Not at all.

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At pinger have a balanced view of what is practical and what is

:22:24.:22:29.

needed to get from here to there. We cannot abandon today's

:22:29.:22:33.

activities for the sake of an uncertain future and equally we

:22:33.:22:37.

cannot let go up of the great new of the future by saying, well, we

:22:37.:22:42.

will just carry on what we were doing. It seems to me, necessity

:22:42.:22:48.

has changed things a lot. It has opened up brand new Vestas in gas.

:22:48.:22:53.

Gas is better than coal. We have understood more about deficiencies

:22:53.:22:58.

of energy. Cars now to double the mileage than they used to do 15

:22:58.:23:04.

years ago. People use less electricity and television students,

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in lighting, in houses - all these things are changing dramatically

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the way in which we think about energy and its impact on the

:23:12.:23:17.

environment. I come back to the rational optimists - it was coined

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by Matt Ridley who believed in the end, technology will come up trumps

:23:23.:23:29.

even if we do not know how the climate change conundrum can be

:23:29.:23:34.

sold, future generations will do it for Russ. Is that mentality good

:23:34.:23:43.

enough? Technology will create a new future. Thomas... We should put

:23:43.:23:48.

a stake through his heart. We think we're going to run out of resources,

:23:48.:23:53.

not true. Again, in my book I talk about the elements that have made a

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difference - silicon, little bits of sand now create everything that

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we do. All the communication technology as well as great mirrors

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and things like that. It is all these things are created by humans

:24:08.:24:12.

need to advance, to do something different, to answer the question

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