The giant has slimmed down, come to grips with the recession, taken

the hardest decisions -- and now chief executive

Chris Gibson-Smith has a confident air when he talks of BP

Exploration's future linked to that of the North Sea

MENTION oil and the response of most people would be ''rich'' -- the

two go together like peaches and cream. But Chris Gibson-Smith quickly

reminds you that oil prices have been falling for 12 years.

Today's price of $18 is worth 60 per

cent less than in real value than it was 10 years ago and BP

Exploration has been forced to slim down to cope with this fall in

price.

However, Chris Gibson-Smith -- a Geordie without the accent -- is

confident that the oil giant ''can live with'' the new lower price.

''We have been repositioning ourselves over the past three years,''

says the oilman, ''and in 1992 we came to grips with the recession. The

hardest decisions have been taken.''

Despite the slimming-down exercise,

BP Exploration is still a giant in non-oil terms with a #4bn annual

turnover in the UK. In addition to the 7000 workers it

employs directly in Scotland, BP supports

a further 60,000 jobs among suppliers

and contractors.

Its importance to the Scottish economy

will be demonstrated later this year when it places two #400m

contracts for the construction work for the Forth and Andrew fields.

Chris Gibson-Smith has a confident air when he talks of his company's

future linked to the North Sea:

''We can see ahead for the next 10 years. North Sea oil will be here

in 25 years' time and in 10 years' time the industry will be the same

size as it is today. There is still the same discovery rate of new

fields in the North Sea -- though they are smaller.''

The development of offshore technology and the new style management

approach by BP means that many smaller fields which were previously

uneconomic are now being developed.

The oil chief executive who started work in the industry

as a geologist, points out:

''Three years ago Forth and Andrew were uneconomic but we looked at

new ways of

developing them and our

own costs. We are still act

ively looking at the Claire

field west of Shetlands and

hope we can do something there.''

To continue as a major

oil exploration arena, the North Sea must remain competitive, he says,

to prevent other offshore areas -- such as Vietnam -- attracting the

investment cash available to oil companies.

It is estimated that almost #400b will be spent between 1991 and 1995

on offshore oil exploration with no less than #36bn of this being spent

in the North Sea.

Gibson-Smith believes that, handled properly, Scotland's oil industry

could grab a share of this lucrative market.

''Let's get up to global standards and have Scotland as a centre of

oil expertise on a world-wide scale,'' he says. ''We are working to

promote that and are beginning to bring Scotland up to world

standards.''

The big threat to the industry, according to the oil executive, is

that the price of oil continues to fall.

Government policy and attitude towards the industry is also ''very

important'', he says. ''We are heavily taxed and regulated. Every action

we take requires some Government department to make a decision, though

there is

an enormous push to speed

up the Government's decision-making.''

The real change the BP executive wants the Government to make is the

removal of the ring fence around the North Sea -- which prevents oil

companies off-setting losses made elsewhere against profits made in the

UK sector.

Petroleum Revenue Tax, he points out, takes 75 per cent of the revenue

from large fields and, since oil began flowing in the North Sea, the

Government has raked in #75bm from this tax.

The Government policy decisions in the gas-v-coal debate will also

have an impact on BP Exploration. ''We don't know the effect of any

Government decisions,'' says Gibson-Smith, ''but we have around 50 gas

projects planned over the next five years and if any of these is set

back, there could be an adverse effect on jobs.

''We expect each project to provide between two and three thousand

jobs. The case is clear. Coal is not an economic competitor but the

issue is

a social one. It is a case

of two great industries rebalancing.''

His industry will probably see a further shake-out of jobs, according

to Gibson-Smith; while those offshore will probably be secure, there

could be pressure on the number of jobs at Grangemouth.

There could also be more movement in the jobs market if BP's

competitors follow its example of working closer with their contractors.

''We now profit-share with our contractors,'' says Gibson-Smith. ''If

for example we agree together that a job will cost #10m and the

contractor manages to complete it for #9m, then we share the difference

with them.

''The new relationship also means that where we would once have 30 or

40 managers on a contract, we now only have three or four; but the

contractors employ more.''

BP's new, open management approach does not extend to new

explorations.

The Gibson-Smith eyes take on a glassy look when he is pressed on his

views about the sector west of Shetlands, which is still largely

unexplored. He will only say: ''I like the western margins as a

province. Yes, I do.''