Ex-BP boss Tony Hayward gets his life back
By Stanley Reed - The NY Times
September 2, 2012
Tony Hayward, left, with Genel Energy’s chairman,
Rodney Chase, at a site in the Taq Taq oil field of
semi-autonomous Kurdistan region in Iraq's north.
Photo: Genel Energy. •
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Tony Hayward now runs Kurdistan-focused oil firm
If there’s a public villain of the Gulf of Mexico
oil spill — one person who, rightly or not, will be
remembered for the deadly blowout, the black slick
and all that followed — it’s probably Tony Hayward.
On television screens and in the pages of magazines,
bewildered Americans saw oil plumes rising,
livelihoods crumbling and seabirds dying in the
viscous crude. And for many of them, Mr. Hayward,
the man who was running BP, came to personify the
And yet here he is now, looking so cool and relaxed,
so unlike the Tony Hayward we know. He’s sitting,
open-collar casual, in a comfortable corner office
here in Mayfair, not far from his old headquarters
Could this possibly be that Tony Hayward — the
pinched, sweaty chieftain of British Big Oil? The
Englishman whom Americans derided as an insensitive
buffoon — and whom President Obama said he would
have fired? The man who sailed his yacht off the
Isle of Wight as the tar balls washed up on the Gulf
Coast? Who, in the middle of it all, delivered that
crisis-P.R. sound bite from hell: “I’d like my life
Yes, this is that Tony Hayward, looking his elfin,
curly haired self and sounding more upbeat than he
has in a long time.
Mr. Hayward, it turns out, has his life back.
Two years after being shown the door at BP, in one
of the most ignominious corporate exits in recent
memory, Mr. Hayward is back in the oil game. Not at
an oil major like BP nor, for that matter, in the
gulf, where oil rigs and refineries were being
tested anew last week, this time by Hurricane Isaac.
No, Tony Hayward is hoping to strike it rich in, of
all places, the oil fields of northern Iraq.
He has some deep pockets behind him. They include a
scion of the Rothschild banking dynasty, a former
dealmaker at Goldman Sachs and two Turkish tycoons
with a foothold in the wild and wildly contentious
world of Iraqi oil. It’s a dangerous game,
financially and otherwise. But despite sectarian
bombings and political deadlock,www.ekurd.net
Iraq’s crude oil production is soaring. In July, the
nation produced more than three million barrels of
oil a day, the most in a decade, eclipsing Iran and
shaking up the old order in OPEC.
Yet oil has also brought its share of problems in
Iraq, breeding corruption and aggravating tensions
with the Kurdish minority in the north. And
precisely where Mr. Hayward and his partners are
making their play.
The Kurdish region has vast, virtually untapped
reserves, and its oil minister is carrying out plans
to export oil and gas directly to Turkey, just to
the north. But Baghdad’s central government
maintains that it alone has the right to negotiate
contracts and exports. The rivalry between Baghdad
and Erbil, the capital of Iraqi Kurdistan, has
nerves on edge throughout the region.
“It is a question of sovereignty, not money,” says
David L. Goldwyn, who served as special envoy for
international energy affairs for Secretary of State
Hillary Rodham Clinton.
Whatever the risks, oil majors like Chevron and
Exxon Mobil are rushing into Kurdistan, too. But Mr.
Hayward isn’t running an oil giant like BP anymore.
He’s running an oil pipsqueak. From his offices here
on Grafton Street, he leads a company called Genel
Energy. It is hardly a household name. On the London
stock market, the company is currently worth about
$3 billion. BP, known the world over is worth about
44 times that.
Yet for Mr. Hayward, Genel is more than a business
opportunity. It is also a shot at redemption — a
venture that, if it succeeds, could help bind up the
psychic wounds of the gulf spill. Whatever his
reputation in the United States, Mr. Hayward is
regarded by many in the British business community
as a solid C.E.O. who was dealt a bad hand. Many
here insist that he was unfairly criticized, by Mr.
Obama on down, for an environmental disaster that no
one could have foreseen or prevented.
Whatever the case, Mr. Hayward declines to discuss
the spill publicly. Friends and business associates
say privately that he remains embittered by how he
was vilified and then pushed out at BP.
He hardly comes across as angry. To the contrary, he
looks unusually chipper on this July afternoon in
“I have been lucky,” Mr. Hayward says. “Having the
opportunity to do something like this is fantastic.”
He continues: “It is fair to say I wanted to recover
some of my self-esteem.”
ON the night of April 20, 2010 — the early morning
hours of April 21 in London — the Macondo well
erupted below the Deepwater Horizon in the Gulf of
Mexico, ripping through the rig, killing 11 people
and creating one of the worst environmental
catastrophes in United States history. Tony Hayward
was having breakfast in a London hotel when he got
By now the events that followed are well known: the
desperate efforts to cap the gushing well; the
harrowing collapse in BP’s share price; the
government inquiries; the multibillion-dollar
cleanup. On July 27, BP said that Mr. Hayward was
out. He was replaced by Robert Dudley, the first
American chief executive in BP’s history.
Mr. Hayward was poleaxed. He’d spent his entire
career at BP, slowly working his way up only to lose
it all after three short years as chief executive.
He took several months off to think. He climbed
Mount Kilimanjaro, skied in the French Alps and, at
53, concluded that he was too young to retire. He
initially thought about going into private equity,
one of the iconic Wall Street businesses of the boom
years, but then ruled that out. It takes many
billions to make a mark in the oil and gas industry,
and few corporate buyout specialists, rich as they
are, have the wherewithal or the patience.
So Mr. Hayward turned to Nathaniel Rothschild, of
the great European banking family, who had
established a company, now called Bumi, to acquire
stakes in Indonesian coal mines and place them under
a listing on the London stock market.
Bankrolled in part by Mr. Rothschild, Mr. Hayward
now hopes to make a new fortune in small oil. He and
his business partner, Julian Metherell, the former
head of energy investment banking at Goldman Sachs,
have joined forces with a pioneer in Kurdish oil
investment, Mehmet Sepil, and Mr. Sepil’s business
partner, Mehmet Karamehmet, a media and telecom
mogul and the chairman of Turkey’s Cukurova Group
Mr. Hayward, Mr. Metherell and Mr. Rothschild tried
to replicate Bumi in the oil business. They set up
what is known as a cash shell, a company with no
business, just a promise that it will find one. It
was called Vallares. Mr. Hayward then spent weeks in
New York, London, Abu Dhabi and beyond, drumming up
investors. Vallares eventually went public on the
London Stock Exchange, raising $2.1 billion. That
money, Vallares said, would be used to buy
unspecified oil and gas assets in emerging markets,
although Mr. Hayward hinted that he was interested
It might be surprising to Americans who watched the
gulf spill unfold on TV, but Mr. Hayward’s new
investors tend to shrug off the disaster and his
inglorious end at BP. After all, they have
entrusted him with a lot of money. His backers
include Paulson & Company, the New York hedge fund
firm run by John A. Paulson, as well as government
investment funds in Kuwait and Abu Dhabi.
“I think he probably got a bad press,” Richard
Buxton, a portfolio manager at the big British asset
management firm Schroders, says of Mr. Hayward.
“In a way he has something to prove,” Mr. Buxton
continues. “From an investor’s point of view, that
is not a bad thing.”
It also helps that Mr. Hayward and Mr. Metherell
each invested £4 million ($6.3 million) in their
venture. Mr. Rothschild invested £90 million ($143
AFTER its initial stock offering, Vallares had a lot
of money but it didn’t have that much time. If Mr.
Hayward didn’t find suitable investments within two
years, he would have to return the money to
shareholders. So he asked bankers at Credit Suisse,
the big Swiss bank, to draw up a list of investment
ideas. The most attractive was Mr. Sepil’s Turkish
company, Genel Energy International, which was then
Mr. Sepil was not originally in the oil business. He
was mostly involved in construction engineering. But
in 2002, shortly before the United States invaded
Iraq, he was working as a contractor in Kurdistan.
It was there that he was approached by Jalal
Talabani, a leading Kurdish politician and now
Iraq’s president, about developing an oil field
called Taq Taq. Mr. Sepil found a rig and put it to
“I didn’t know anything about oil but the tank of my
car,” Mr. Sepil recalls.
Taq Taq turned out to be a field with billion-barrel
potential. Eventually Mr. Sepil assembled stakes in
various Kurdistan oil fields. When he heard that Mr.
Hayward had raised so much money, he decided to get
One July evening in 2011, Mr. Hayward, Mr. Sepil and
Mr. Metherell dined at a private club off Berkeley
Square in London. Mr. Sepil and Mr. Hayward hit it
off, and a business alliance was forged. Because of
Kurdistan’s precarious political situation, Genel’s
oil came very cheap — $1.50 a barrel for reserves
and prospective oil. “It was unusual to find assets
of this quality that hadn’t been bagged by the
majors,” Mr. Metherell says.
Mr. Sepil was looking for someone to bring capital
and better technology to Genel, and he says he found
that someone in Mr. Hayward. “I always admired
Tony,” he says. The gulf spill, he says, was
“something that could have happened to anyone in the
Before long Genel and Vallares merged, leaving the
combined company, called Genel Energy and listed in
London, with a pile of cash. The Turkish side owns
about 45 percent of the company, although its voting
rights are limited to just under 30 percent. Mr.
Sepil is not on the board, in part as a result of a
previous scrape with British securities regulators
that resulted in a stiff fine. The board is headed
by Rodney F. Chase, a former deputy chief executive
of BP, and is composed mostly of veteran London
For the moment, things seem to be going relatively
smoothly. Mr. Hayward travels to Kurdistan about six
times a year and often visits Ankara, Turkey’s
capital, where Genel’s management headquarters for
Kurdistan is based. In Ankara, he typically stays in
Mr. Sepil’s home.
“Tony is running the whole company,” Mr. Sepil says.
“I am helping him with the politics — to understand
Mr. Sepil says that Mr. Hayward makes a good
impression in Turkey by making occasional use of the
Turkish he learned while doing field work there as a
graduate student in geology. “He is the golden boy
here,” Mr. Sepil says. In Kurdistan, Mr. Hayward
spends much of his time pressing Genel’s interests
with senior government officials.
Today Genel is the leading oil producer in
Kurdistan. It produces 40,000 barrels a day, but it
could be pumping twice that if it could export. The
oil can be exported through a Baghdad-controlled
pipeline from Kirkuk to Ceyhan in Turkey, and in
smaller amounts by truck. But pipeline exports have
been sporadic because of disputes between the Kurds
and Baghdad. Unless the oil can be exported, it goes
to Kurdish refineries for a price of about $60 per
barrel — well below that on world markets.
Yet despite the obstacles, Genel is generating most
of the cash needed to pay for its
$200-million-to-$250-million-a-year exploration and
development program in Kurdistan. It is also sitting
on about $1 billion for acquisitions.
Mr. Hayward, who has a Ph.D. in geology, often pores
over seismic images, looking for the next big find.
In August, Genel announced a flurry of deals,
spending about $860 million to strengthen its
position in Kurdistan. Mr. Hayward has also been
trying to diversify Genel’s sources of oil. The
company recently acquired a small enterprise called
Barrus Petroleum, which explores off the coast of
Morocco, as well as acreage off Malta and in
The Kurdistan Regional Government is gradually
persuading the oil majors to defy Baghdad and invest
in Kurdistan. Recently Chevron, Total of France and
Gazprom, the Russian giant, have signed deals,
despite Baghdad’s threat to bar them from new
contracts in Iraq. Mr. Hayward argues that the Kurds
will eventually win.
“You can’t have one million barrels a day of oil
shut in,” he says, speaking of Kurdistan’s eventual
production target. The region’s capacity is now
250 thousand barrels per day.
So far that calculation has not been reflected in
Genel’s share price, which has fallen by about 30
percent since the company went public. But some
analysts are optimistic.
“The situation between Baghdad and Erbil could be at
an inflection point,” says Phil Corbett, an analyst
at Deutsche Bank in London. With a secure pipeline
to world markets, he says, Genel could realize the
potential of its fields. If that happens, its share
price, which closed at 689.50 pence on Friday, could
easily double, he says.
Mr. Hayward, for his part, seems as excited as ever
about oil exploration, not just in Iraq but also in
Africa, where he is hunting for another acquisition.
He points out that many recent discoveries in Africa
have been made by relatively small companies, rather
than by the majors. Energy exploration is a risky,
expensive business. But Mr. Hayward, the face of the
gulf spill, is unbowed.
“People are only beginning to wake up to look at the
world of exploration,” he says. “If the world stays
as open as it is, the little guy will be able to
make a difference.”
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