(FORTUNE Magazine) – After a tough day of performance reviews in London last April, BP Amoco CEO John Browne boarded the Concorde to attend the opening of a retrospective of American art at the Whitney. Ensconced in the right-hand window seat in the first row, Browne spent most of the plane trip reviewing work papers, his speech for an Earth Day award at the United Nations, and some industry projections on oil prices. Attentive staff conferred on his schedule: a meeting with Kofi Annan, another with an environmental group. They laughed over a newspaper item about a rival. From across the aisle, Goldman Sachs chief Hank Paulson congratulated Browne on his stance on global warming: When the rest of the oil industry was pooh-poohing the threat, Browne won plaudits for saying it needed to be taken seriously.

Relaxed and confident, Browne was in a celebratory mood. As well he should be. With a double-whammy of huge deals--a $57 billion agreement last August to buy Amoco and a $27 billion agreement last April to buy Atlantic Richfield--the 51-year-old CEO has taken BP into the big leagues: It is now the second-biggest publicly traded oil producer.

That is a remarkable turnaround. Seven years ago BP was on the ropes. Its stock was selling at a small fraction of today's price (see chart), and it ran a distant fifth in production, with so-so assets. BP Amoco is now a global player that can compete with Exxon and Royal Dutch/Shell. The Amoco deal was announced and completed in just 100 days, an astonishing pace in an industry not known for agility. "John is several steps ahead of most people, not just one step," says Daniel Yergin, head of Cambridge Energy Research Associates and author of a Pulitzer Prize-winning history of oil, The Prize.

When Browne talks, people listen, and when he acts, they react. The Amoco transaction, for example, sparked Exxon to reopen its $80 billion merger talks with Mobil. The Arco deal left another Arco suitor, Chevron, hoping to do a deal with Texaco, an effort that recently collapsed. Both transactions caused consternation at Shell. Long the biggest private producer, it has slipped behind Exxon/Mobil (assuming that deal goes through) and BP Amoco. Browne has also won notice outside the small oil world. He was named to the board of what was then Daimler-Benz because, fellow board member and Vivendi Chairman Jean-Paul Messier told the Financial Times, he was one of the European CEOs who "make their companies move the most."

What Browne will do next is a matter of speculation throughout the industry. He gives few hints. "Predicting is very much a fool's game," he says. He professes to be no visionary but rather a pragmatist who has built an opportunistic, shareholder-value-driven company. BP has led the industry in two of the past four years in return on capital; Exxon was first the other two years. He is known for rewarding those who deliver and swiftly dispatching those who don't. Shortly after the merger, BP Amoco chat rooms were rife with talk of "surviving and surrendering to Sir John," as Browne is properly known in Britain.

First, of course, he has to complete the Arco deal and integrate that company into BP Amoco. Second, he has to make good on his assurances to Wall Street that he can wring some $3 billion in cost cuts out of the two acquisitions. And then he has to take all those new assets, figure out which ones to keep, and make what's left grow faster than those of his rivals.

Most important, Browne must develop a strategy in natural gas. In several ways the purchases of Amoco and Arco are more about gas than oil. Yes, the deals bring BP Amoco's oil production to more than four million barrels a day, about 800,000 less than Exxon and 300,000 more than Shell. But they also make BP Amoco the third-largest producer of natural gas, behind Russia's Gazprom and Exxon. That's significant because world gas demand is projected to grow twice as fast as that for oil in the next ten years. As a percentage of total production, gas will increase from 20% to 34%, in line with Exxon and Shell.

Plenty could go wrong. Former Amoco executives criticize BP's understanding of natural gas, saying the company doesn't comprehend how truly global the market is and how much handholding natural gas customers need. For all his management savvy, Browne has yet to prove he can move beyond cost cutting to growth. One of the big issues at a recent BP Amoco management meeting was how to keep morale up as the company cuts job after job. Browne himself worries about whether he is exerting too much personal influence on the company. And there's the fact that most mergers fail; the risk of failure is even higher when a company tries to digest two of them.

Still, if anyone can successfully integrate two huge acquisitions in a year to gird for battle with Exxon and Shell, it's Browne. A workaholic, the never-married Browne often keeps London time in the U.S. by starting his day at 4 A.M. Employed by BP since graduating with a physics degree from Cambridge in 1969, "he works like a beaver and never stops thinking about the company," says David Simon, his predecessor as CEO. "He's totally in love with it. It is his wife, his sister, his brother. It's everything to him."

He's also very, very smart, often becoming an expert in what interests him, from petroleum engineering and finance to opera and woodcarving. Early on, he became fascinated with the financial markets, and investment bankers say Browne sometimes knows their business better than they do. "Calling on John was like taking an oral exam before a very tough professor," says Ron Freeman, European co-chief of Salomon Smith Barney.

Browne is also intrigued with the world of technology. He joined Intel's board in 1997 and says his seat gives him "a window on the future," making him more sensitive to everything from how the Internet will affect relationships with customers to how to make BP Amoco as flexible a company as Intel.

Browne's intellectual curiosity is overlaid with a private, somewhat shy personality that is out of sync in an industry known for macho, hell-raising types. But Intel's Andrew Grove says that the combination of Browne's intellect and barely audible speaking style makes him devastatingly effective. At Intel board meetings, "people practically stop breathing and lean out of their chairs to listen so they don't miss any of those soft words," says Grove. Browne has never been known to lose his temper or even to raise his voice.

Beneath this calm charm, however, lies a cold determination to build BP Amoco into the world's most valuable energy company as measured by returns to shareholders. Once negotiations with Amoco began, notes former Amoco chairman Larry Fuller, Browne was relentless. "Not that he was capable of pushing us around," says Fuller. Of course not. But it was Browne who insisted on finishing negotiations during a phone call with Fuller at five on a Saturday morning when Fuller was at a family vacation home, celebrating the arrival of a new granddaughter.

Browne's sense of urgency is a reflection of what's been happening in the oil patch over the past decade or so. Greater use of information technology has made it easier to find oil and allowed a slew of smaller players, dubbed "petropreneurs," to sip profitably in small fields. At the same time, oil price fluctuations, mostly downward, turned oil into a cutthroat commodity game in which the company with the lowest costs wins. In this kind of environment, two kinds of companies look like winners: big integrated companies that can ride out industry downturns, and nimble niche players.

In 1996, after a year and a half as CEO, Browne surveyed this scene and decided to buy his way to bigness. Finding new partners would also solve several other problems. BP was losing market share in the U.S. retail gasoline market. It faced higher costs and stagnating production in Alaska. And it had failed to significantly expand oil and natural gas reserves. Gas was critical. Not only were growth rates high, but getting into cleaner-burning gas would allow Browne to make good on his desire to counter the industry's environmental critics by showing that the industry was serious about reducing the chances of global warming. With the addition of Arco, BP Amoco will have a rich array of gas assets: fields in production and fields in development all over the world, from Siberia to South America.

On his trawl for partners, Browne's first stop was Mobil, which was not interested, at that point at least, in being taken over. Then, in May 1998, Browne called Fuller (now BP Amoco's co-chairman), who was more receptive. The companies had informally talked in the past about combining their chemicals and downstream businesses. Browne wanted it all. He got it. Gas fields in Trinidad, the U.S., and South America were new to BP, and Amoco's oil and gas fields in the Gulf of Mexico, the North Sea, Venezuela, and Azerbaijan extended BP's reach.

With Amoco in his grasp, Browne turned to Arco. As the only other major player in Alaska, Arco was the key to making those fields competitive. Arco also had just discovered a vast eastern Indonesian gas field called Tangguh, off Irian Jaya, perfectly located to serve the growing economies of the Far East. And it was active in China, another potential gas market for BP Amoco. When oil prices slumped to $10 a barrel earlier this year, Arco chief Mike Bowlin decided he needed help. He called Browne in January, offering Arco on a platter. Browne couldn't resist. "Context is terribly important," says Browne. "Our analysis was that, long run, oil prices wouldn't go below $10 to $11. The timing made the possibility of the deal." Prices are now in the $16-to-$18 range.

Browne now largely has the assets he wants, bought at what he thinks was the bottom of the market. "They were both quite cheap," agrees Fergus MacLeod, oil analyst at Deutsche Bank in Edinburgh, in part because Browne used BP stock, which was more highly rated at the time than either Arco's or Amoco's. (Leveraging stock value, a common practice in Internet deals, is unusual in the oil industry.) With Amoco, BP also took advantage of accounting rules that did not require it to write off goodwill.

At BP Amoco's upcoming analysts' meeting in mid-July, Browne is expected to provide more detail on what the company might sell and to announce goals for the next three years. Some obvious properties are likely to go: heavy-oil fields in Canada and BP Amoco's 64% share of the Altura joint venture with Shell that produces oil in Texas and New Mexico. Certain chemical businesses may be sold, and the company has already put on hold the construction of a petrochemical plant in China whose foundation Amoco had laid. Browne has also been negotiating to buy out Mobil from their joint venture in Europe.

In exploration and production, Browne says he will concentrate on big fields such as the Gulf of Mexico or the North Sea and Alaska, where costs are lowest and where BP Amoco understands the geology. In downstream operations, Browne wants to be first or second in his markets.

To buy time for his growth strategy, Browne is concentrating on wringing costs from Amoco and is planning his cost cutting for Arco. By the end of this year, he says, BP Amoco will have eliminated 10,000 jobs out of 99,000 and cut $2 billion in annual costs. The Arco deal will result in still more layoffs and cutbacks as Browne slashes duplication in Alaska.

Even after swallowing two former competitors, BP Amoco lacks the technological breadth of Shell or the financial clout of Exxon. What it does have is competitive, cost-conscious management. "BP," a Shell man was once heard to remark, "is an example of what excellent management can do with a crap set of assets." Browne is implanting BP's ruthless culture into the soul of its new acquisitions. That culture came from Robert Horton, who had turned around BP's American business with Browne's help. When Horton returned to London as chairman and CEO in 1990, he was brim-ming with management ideas he picked up by watching Jack Welch transform GE.

Horton talked of creating a looser, more entrepreneurial organization, but he failed to give it clear direction. A dive in oil prices did him in. Horton thought higher oil prices would sustain BP's ambitious capital-spending program. He was wrong. Result: a loss of $624 million in 1992. In a move that shook Britain's corporate establishment, David Simon, then BP's chief operating officer, replaced Horton as CEO. During an afternoon at his cottage in Norfolk, Simon invented a brilliant rescue formula. Called the 1-2-5 plan, it called for BP to pay down debt by $1 billion a year, boost profits to $2 billion a year by 1995, and cut spending to $5 billion a year on new capital. By the time Simon handed the reins to Browne in 1995, those goals had been surpassed.

While Simon focused on getting the books sorted out, Browne, then head of exploration and production, began tinkering with how to change BP's culture so that it could make money even when oil prices slipped. His first rule: Never spend money you don't have. "As my mother says, it's always wise to keep a piece of the blanket to cover your feet in case it gets cold out," says Browne, whose 82-year-old, Transylvanian-born mother has shared his home in London's tony Chelsea district since shortly after his father died in 1980.

Borrowing from the retail side of the business, Browne created small business units within the exploration department, gave them profit-and-loss responsibility, and used performance contracts to ensure that the units knew exactly what they were expected to achieve. "The power in our organization is the performance contract," says John Manzoni, the BP executive in charge of integrating Amoco. Anyone who can't meet the terms of his contract must let top management know immediately. Another Browne rule: No surprises. To get the benefits of working for a big corporation, Browne also created "peer groups," or quarterly meetings between heads of similar business units. They share information, allocate capital among themselves, and fix one another's problems. That fulfills a third rule: If you are in trouble, ask for help.

When Browne got the CEO job, it was his record of producing more earnings with less capital that had made him the clear choice. Now he is extending his system to the rest of the company. He also designed a fierce review process that he personally conducts with each major business group in grueling 3 1/2-hour sessions every month. "There really is an intense work ethic here," says Steve Gates, Browne's chief of staff, who was general counsel at Amoco.

A source of tension between the merger partners is the way BP makes decisions. Browne has insisted that all top executives work in London so that they can network informally, walking in and out of one another's offices. The BP men have known each other for years and can often read each other's thoughts. Amoco executives have been caught short a couple of times, says Rodney Chase, Browne's deputy, because they didn't understand that decisions were being made. They were waiting to have a meeting, preferably over lunch. "We did a lot of business over lunch at Amoco," says Gates. "Here it's just done in the office."

Amoco, in turn, has taught the teacher a few things. Chase says Amoco was better at finding out what customers want before trying to sell them something. That is helping BP Amoco clinch natural gas sales that it would have missed in the past. With Arco, the integration looks less daunting because there are few expectations; no executives are guaranteed jobs, and it is assumed that Arco's board and top management will leave.

BP Amoco's future problems will only get more complex. Shell, which has been undergoing a painful cultural overhaul, is getting its act together. The Exxon/Mobil combination is formidable. Most interesting, Browne's reputation as the oil industry's green CEO could be in for a battering. This year it was the BP Amoco shareholders' meeting that Greenpeace picketed, not Shell, the usual poster boy for environmental abuse. A bigger concern is that as it enlarges, BP Amoco could become bureaucratic, losing its entrepreneurial verve.

Browne seems to relish these challenges, perhaps too much. "I wish he'd spend a year or two reading liberal arts subjects, which he loves, take a little more time off, and have a drink or two," says Simon. BP staffers wistfully hope Browne would get married so that maybe they could work less. On the Concorde, Browne himself mused aloud about taking August off. And he's concerned about his health. During the Amoco and Arco negotiations, he smoked six cigars a day, a habit he had picked up from his late father. Browne suddenly found himself wheezing during his fitness swims.

Then again, given the continuing merger dance of the industry, some other oil chieftain might want to sell. Browne says the point isn't to make BP Amoco the biggest energy company in the world--just the best. But he tells a revealing story. On his last trip to Los Angeles, he saw a screening of the new Star Wars movie. In his favorite scene, the underwater vehicle is attacked by a huge sea monster. Then that monster is attacked by a bigger one. The best line of the movie, says Browne, is Liam Neeson's remark, "There's always a bigger fish."

REPORTER ASSOCIATE Len A. Costa