( AP ) - BP PLC outlined a plan to streamline its structure, cutting the number of business units and stripping out management layers, as it admitted Thursday that its poor financial performance and safety record had left it lagging behind its oil industry peers.
The massive restructuring is the linchpin of new Chief Executive Tony Hayward's attempt to restore BP's advantage against its competitors after a host of safety and operational problems.
Analysts have blamed BP's complex organizational layout for many of those woes, which have included a deadly Texas refinery accident, an oil spill in Alaska and delays at its Gulf of Mexico oil and gas projects.
"BP's performance has materially lagged our peer group in the last three years," Hayward said in a worldwide message to staff that was also issued to the London Stock Exchange. "It has been poor because we are not consistent and our organization has grown too complex. At the root of all this is a need to change our behaviors."
Under Hayward's plan, that will start with cutting the number of BP's main business segments from three to two. The company will incorporate its existing gas, power and renewables business into the two remaining units - exploration and production, and refining and marketing.
It will also create a smaller division for alternative energy to handle the company's low-carbon business and future growth options outside oil and gas.
Hayward, who took over from disgraced former CEO John Browne in May, said that BP's corporate infrastructure would be "rigorously reviewed," with the result that up to four layers of management will be shed in some parts of the company.
He said that job losses would be inevitable, but stressed that front-line operations would be strengthened. He said earlier this year that the company would cut its head office work force by 25 percent.
Analysts said the overhaul would have little short-term impact - most expect BP to unveil poor quarterly results on Oct. 23 after disruptions to U.S. facilities - but was positive for the company's longer-term future.
"In our view the changes are about better efficiency, and the upside should come from better revenue growth as a result of delivery on major projects and on operational efficiency," analysts at J.P. Morgan said in a note.
Fadel Gheit, an analyst for Oppenheimer & Co., said that BP was taking the "first steps in the right direction."
Hayward said BP was making good progress on safety, telling staff that a focus on people would ensure that the company deployed the "right skills in the right places" and allowed staff to exercise professional judgment without "unnecessary interference."
Hayward said that the bulk of BP's competitive shortfall represented revenues lost from impaired U.S. refining capacity and delays to new production in the Gulf of Mexico. The remainder arose from BP's "unacceptably high" cost base relative to its rivals."We expect the revenue gap to narrow as major new production comes on stream in the fourth quarter and refinery throughputs rise at Texas City and Whiting over the coming months," he said, adding that the structural changes would reduce the company's overhead costs.
Hayward said he did not anticipate major disposals but would not rule out small-scale asset sales.
The comprehensive overhaul further tarnishes Browne's legacy at BP.
Originally hailed as a dynamic leader for his stewardship of the company's expansion into the United States and attempts to fashion BP as an environmentally friendly oil company, Browne's 10-year tenure ended in tatters.
He resigned in May just hours after a judge lifted a legal injunction preventing a newspaper from publishing details of his private life and accusations that he misused company resources. He denied those allegations but had already been due to leave more than a year early after taking responsibility for the string of problems in the United States.
Hayward said that some of the changes announced Thursday are already under way and the others would be introduced immediately.
BP shares rose 2.3 percent to 593.5 pence ($12.11) in London. Its U.S.-traded shares gained 47 cents to close at $71.82 Thursday.