The Times: The Andrew Davidson Interview: Life’s a gas for BG supreme
30 May 04
Frank Chapman is the man his rivals would like to poach. But the man who loves sailing says he has already plotted a course for the next nine years
SIZE, says Frank Chapman, looking as lean and sleek as a greyhound, is not important. Well, you could have fooled me. For a boss whose business is sprinting ahead right now, you would think size is one of the mission aims carved above the firm’s front door.
For one thing, doesn’t size make you less likely to be taken over by someone bigger? “Well, maybe,” grins Chapman, “but it’s not something I spend a lot of time thinking about.”
Really? Chapman, the former Shell high-flyer who has been chief executive of BG for four years, just raises his eyebrows and shrugs. And who can blame him for being confident? He has just released first-quarter results that are ahead of forecasts. These follow a leap in earnings and turnover (£3.6 billion) at BG for 2003.
On a broader front its business — finding and selling natural gas round the world — now looks on the button as countries search for more eco-friendly alternatives to oil. And compared with the bigger and more established FTSE 100 giants BP and Shell, BG — spun out of the old British Gas — is surging ahead in earnings growth and reputation. Many now rate Chapman as one of the top bosses in Britain.
And there’s the rub. Chapman, an engineer turned manager who has spent more working years abroad than at home, is in that awkward position of doing so well that all sorts of people want a chunk of him.
Earlier this year the City was awash with rumours that he was exactly the man Shell needed to sort out its problems. Those followed half a decade of whispers that many of the oil giants, including Shell, had run a ruler over BG as they thought about increasing their exposure to gas. Maybe Shell would have to buy BG just to get Chapman? Now that would be flattering.
So far, it hasn’t happened, and it would be a change of style for Shell if it did. For a start Chapman, 51, son of an East End lorry driver, seems rather less patrician and more approachable than most bosses at the oil giants. Tall and thin, snappily dressed in a blue check suit, his pinched features set off by an earnest charm, he is as happy chatting about how travel opened up his own horizons as he is about midstream, downstream, and other oily technicalities such as shipping LNG (liquified natural gas — one of BG’s big growth products) halfway round the globe.
In fact, the only thing he does not want to chat about, sitting in an armchair in his spacious second-floor office at BG’s Reading business-park base, is Shell.
“I haven't worked there for nine years,” he sighs, “so if you want a comment, I think you should ask them.”
Oh come on, I have to ask if he could be tempted back? “And I have to say I am not going to comment,” he laughs.
Those close to Chapman confirm he is too involved in creating his own business to want to leap into somebody else’s right now. BG was set up with a blank sheet of paper for future strategy, one of three plcs born out of the slow dismantling of British Gas (the UK retail side became Centrica, and the UK pipeline business was renamed Transco). Chapman, working closely with former chairman Sir Dick Giordano, had the chance not just to reshape the the business, but also to revive morale at the organisation.
And that makes many think he will stay there, especially as, so far, his decisions seem to have paid off. BG has concentrated on getting gas out of the ground and shipping it to key markets in Europe, North America, Brazil and India.
Along the way, it has not been frightened to sell off important oil finds, if offered enough cash, or to invest heavily in new initiatives, such as the growing market for LNG (liquifying gas, transporting it by tanker, and re-gassifying it where demand is high). All the time, says Chapman, the emphasis has been on selling, not finding.
He adds that if you look at the forecasts for worldwide energy demand over the next 20 years, demand for gas will grow about 50% faster than demand for oil. “So the stage is set fair for BG,” he says.
At the same time, inside the company Chapman has created a performance culture designed to reward success. “You are given targets and measured rigorously against them,” says a former Chapman colleague. “If you fall short, you don’t get given many second chances.”
That, according to the same source, fits with Chapman’s leadership style. “Very positive, strong personality, alpha male, hard driving, high expectations, great communicator, quite tactile, absolutely tireless.” And so far he has managed to pull it off without arrogance, or the airs and graces that bosses on a hot streak can sometimes take on.
There has been no attempt to gentrify his nasal London tones — he was born in Customs House, just off the Royal Victoria Docks — or to get diverted by hobnobbing with world leaders.
“Frank is driven by the business,” says Martin Houston, BG’s executive vice-president North America. “What we have become is his creation. And he has worked really hard on the culture of this organisation.”
Chapman says he wants to build something that will last. “Nothing really worries me in the short term. That sounds very complacent but we have good plans presented to 2009, and what is important to BG is that we think long term. And we are pretty excited about the possibilities.”
There have been ripples along the way: doubts from sceptics about whether he has the requisite gravitas, and moans from shareholders about low dividends and high salaries (Chapman took home £1.2m last year). And analysts question whether BG, hostage to the world economy, can maintain its performance — but, so far, Chapman has refused to blink.
That assured confidence comes from a tough upbringing in the East End, watched over by two big sisters and a devoted mother who worked as a matron’s assistant in local hospitals. His mum came from Italian stock, his gregarious dad had been in the Royal Navy.
Chapman was encouraged to follow his own bent for the mechanical — “how things work” — into an engineering degree at Queen Mary’s College and later a first job at BP in its research centre. He jumped into Shell three years later when he saw an ad promising travel. For the boy getting out of the docks, it was an opportunity he could not resist. He went on to work in the Netherlands, Singapore, South Korea, Norway, Sarawak and more.
Those who met him on the way up remember his uncomplicated enthusiasm and his sharp dress sense. Chapman says working in different cultures has made the greatest impression on him. “We now run a business that has activities in 20 countries and I think this has had an enormous influence on me, not just the travel but the ability to work with different people.”
He has had setbacks. His first marriage collapsed, and his leap from Shell after 18 years into a Norwegian oil-services firm, Kvaerner, didn’t work out. He took the British Gas slot, heading its exploration and production arm, shortly after, and was in the right place when the demerger happened.
Since then he has married again, to Kari, a Norwegian. Now he has two children under five to add to two teenagers from his first marriage, and friends say the Norwegian love of the outdoors has become another driver in his life.
Chapman adores serious sailing and his boats are getting bigger. He even has a BG-sponsored contender in the 2004 Global Challenge round-the-world race with pairs of employees joining the crew for different legs. He talks passionately about the leadership lessons of working with a crew.
And can he see himself ever moving on from BG? He shakes his head. They are working on plans for the company to 2013 and that, coincidentally, is his retirement date.
“Who knows what will happen in the future, opportunities come up and maybe the company will need someone else, but my base plan is that I am sticking with BG.”
You can bet, though, that it won’t be the end of it.