BP said yesterday that Lord Browne, one of the UK's most widely admired businessmen, will retire as chief executive of the UK oil company at the end of July. He will be succeeded by Tony Hayward, currently BP's head of exploration and production.

Peter Sutherland, BP chairman, paid tribute to Lord Browne as "the greatest British businessman of his generation" who had "transformed BP into one of the biggest energy groups in the world".

But Lord Browne's stellar reputation has been dented by problems in the US during the past 18 months, including an explosion at the group's Texas City refinery in 2005 that killed 15 people.

Last August, BP was forced to shut the eastern area of its Prudhoe Bay oilfield in Alaska, one of the largest fields in North America, following the discovery of an oil spill in the ecologically sensitive region.

The group was also probed last year by the Commodities and Futures Trading Commission in the US over alleged manipulation in 2004 of propane gas prices, and over trading in crude oil in 2003-2004.

An independent panel led by James Baker, former US secretary of state, is due to report on the safety culture at BP's North American refining operations.

Lord Browne, who joined BP in 1966 and became BP chief executive in June 1995, said it had been a "privilege" to head BP. "We clearly have important issues still to deal with. which I am determined to address," he said.

Mr Hayward was appointed to the BP board in 2003.