The era of the oil industry mega merger is over, according to the chief executive of BP.

Tony Hayward said that there is “no industrial logic at all” to the type of big-ticket takeovers that transformed the industry a decade ago. The industry will be defined instead by partnerships between the big companies and the new generation of state-owned rivals and governments of resource-rich countries.

“We need access to new resources and we need access to new customers. Combining with another oil giant gives us neither,” he said in an interview with The Sunday Times.

The industry is grappling with the decline in the West’s oil demand and the crash in the price from last year’s historic highs. Oil companies have launched cost-cutting programmes and speculation has increased that the industry is poised for consolidations like those that combined BP and Amoco, Exxon and Mobil, and Chevron and Texaco.

Hayward said the time for such deals had passed. “There is no industrial logic for it at all. If you put ourselves and Shell together you don’t add to the resource base,” he said.

Instead, he is repositioning the company to take advantage of new markets in the east. BP has begun talks with Petrochina and Sinopec on the possibility of building a $7 billion (£4.2 billion) refinery in China, which would be one of the few for a large western oil group.

“We have been pretty public about building our position in China. The thing that we are missing is a refinery and we are talking with the Chinese about opportunities to work with them to build one,” he said.

“We would end up with less than a 50% share in it and it’s got to be made in three or four years.”

BP has also partnered with China National Petroleum Company in Iraq. On Tuesday they will sign the first big oilfield development contract there since the industry was nationalised in the 1970s. The Rumaila field accounts for half of Iraq’s production.

Hayward said he was “very, very confident” that BP could maintain the dividend payment as he continues to squeeze costs and slim down operations.

He believes the long price of oil per barrel will hover between $60 and $90. BP is also centralising its exploration and production business in Houston.

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