Lord Browne of Madingley made a dramatic return to the energy industry yesterday as he took up a full-time role spearheading the European expansion of an American private equity group. The former BP chief executive is joining Riverstone Holdings, the world’s second-largest dedicated energy fund, just under four months after his humiliating departure from the oil giant.

In a statement that took the British oil industry by surprise, Riverstone said that the 59-year-old would become the managing director and managing partner of Riverstone Europe on September 1. He will be based in London.

The move was announced shortly after Apax Partners, the private equity firm, said that Lord Browne was stepping down as nonexecutive chairman of its advisory board on the same date.

Referring to his new role, Lord Browne said: “Since its founding in 2000, Riverstone has emerged as one of the leading and certainly one of the most respected private equity firms in the energy industry. This is an opportunity for me to return to the energy industry full-time, which will enable me to best apply my lifelong skills and experience.

“I continue to believe it is a unique and important time in the energy industry and I am quite excited to actively participate in Riverstone’s growth strategy to identify and manage attractive investment opportunities.”

Riverstone was set up in 2000 by David Leuschen and Pierre Lapeyre Jr, both formerly at Goldman Sachs, the investment bank closest to BP.

The private equity firm has raised $9 billion in its short history and invested two thirds of that in 41 companies operating across the power, energy and oil sectors. The investments, all made jointly with the Carlyle Group, include 4Gas, a Dutch liquefied natural gas business, and North America’s largest biofuels refinery. It is understood that Mr Leuschen approached Lord Browne with the job offer shortly after his controversial departure from BP in May, when a High Court judge ruled that he had lied about his relationship with Jeff Chevalier, his former boyfriend.

Lord Browne resigned hours after the ruling emerged and left his position as a board member at Goldman Sachs days later. Mr Leuschen knows Lord Browne from his time at the investment bank.

Mr Leuschen described Lord Browne as “one of the most visionary, experienced and talented executives in the energy industry with an unparalleled global understanding”.

“We are looking forward to Lord Browne helping us expand our existing general practice and identifying new opportunities in the alternative and renewable energy markets,” he said.

Lord Browne transformed BP during his 12 years in charge. He sparked a swath of industry consolidation with the acquisition of Amoco and led the group into Russia. His departure from BP meant that he was forced to surrender a potential £15 million leaving package.

Industry experts said yesterday that the man many believed was the best businessman of his generation would be on a multimillion-pound pay package, including salary, bonus and a share of the investment return made by Riverstone’s funds. Riverstone said that it could not comment on “compensation matters”.

While private equity companies are well established in American, British and European economies, they have only just begun to make inroads into the oil and energy sectors. However, executives told The Timesthat companies such as Blackstone and Carlyle were circling. One UK company is understood to have been asked to name a price for a minority stake in all its exploration and production assets.

Martin Halusha, the Apax chief executive, remained firmly in support of Lord Browne, despite his fall from grace. Speaking yesterday, he said that Apax had “benefited enormously” from Lord Browne’s advice and experience. He added: “I understand his desire to return to a full-time executive role in a sector that we do not cover and in which he is an acknowledged global leader. We wishI him well in his next move.”

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