Tony Hayward, the chief executive of BP, stamped his mark on the oil giant today by announcing plans to cut jobs and slash costs in a bid to achieve a “fundamental shift” in the way the company operates.

Mr Hayward said that redundancies would be inevitable as BP sought to close the gap on its rivals and end three years of poor performance.

Four layers of management will be purged in parts of the business, while BP’s Gas, Power and Renewables divison will be disbanded and integrated into other, existing arms, such as Exploration and Production.

No precise number on potential job losses was given though one source told the Times that around third of 500 senior managers could go.

Vivienne Cox, previously head of Gas and Power, will now head a new Alternative Energy business.

Mr Hayward stopped short of attacking the strategy of his predecessor, Lord Browne of Madingley, but said that BP's cost base was "unacceptably high".

Money freed up by the cutbacks would be switched to frontline operations to ensure that the “right skills are in the right place”.

Although no big disposals were expected, some small-scale asset sales may be made.

Mr Hayward said: “Our problem is not about the strategy itself but about our execution of it.

“BP’s performance has materially lagged our peer group in the last three years. It has been poor because we are not consistent and our organisation has grown too complex.

“At the root of it all, there is a need to change our behaviours.”

Shares in the group, which had been climbing before the statement, were up 12.5p at 592.5p in early afternoon trading.

The statement follows a wide-ranging review of the BP empire by Mr Hayward, who took over when Lord Browne resigned at the beginning of May after lying to a High Court judge over his relationship with a former boyfriend.

The group has lurched from one scandal to the next, including the continuing fallout from the Texas City refinery blast two years ago and investigations into pipeline leaks at its Prudhoe Bay field in Alaska.

Mr Hayward said today that his three priorities were "safety, people and performance", and he insisted that the group was making good progress on its safety record.

He added that BP's competitive problems stemmed from continuing outages at its US refineries and delays to new production projects, such as the Thunder Horse oilfield in the Gulf of Mexico.

Yesterday Citigroup cut its forecasts for BP's full-year profit by nearly 5 per cent and said that the group's third-quarter profits may come in under $4 billion (£1.96 billion), 19 per cent down on a year ago.

Mr Hayward said: "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.

"The changes we are setting out today will reduce our unacceptably high overhead costs.

"But it is their effect on operational efficiency over the longer term that I believe will ultimately yield the most significant benefits."

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive