BP Will Fulfill Commitments in the Gulf, New Chief Says


LONDON — Robert Dudley, BP’s newly appointed chief executive, said Tuesday that the oil giant remained committed to its business in the United States as it moved to sell $30 billion in assets before 2012 to pay for costs related to the oil spill in the Gulf of Mexico.

BP on Tuesday set aside $32.2 billion to deal with the aftermath of the spill, leading to a record second-quarter loss of $17 billion. That compared with a $4.4 billion profit in the period a year ago.

The company picked Mr. Dudley, an American, to succeed Tony Hayward at the beginning of October. He would be BP’s first non-British chief executive. Mr. Hayward is stepping down after criticism of the way he handled the spill.

Upon his departure as chief executive, Mr. Hayward is entitled to a year’s salary worth £1 million, or $1.5 million. He would also get a pension fund worth about £11 million, which he amassed over the 28 years he worked for BP.

Mr. Dudley, who was joined by a visibly tired and saddened Mr. Hayward at BP’s headquarters Tuesday, pledged to stick to BP’s commitments in the Gulf, which includes cleaning up the oil and compensating residents.

“We will fulfill the promises we’ve made,” Mr. Dudley said at a media briefing in London. “Meeting our commitments is critical for BP’s long-term success. Taking over this role, I will not reduce my commitment in the region.”

He added that “it’s not our intention to exit the U.S. nor do we believe we will have to. We fully intend to maintain those businesses and restore our position in the Gulf.”

BP said the planned sales, which represent less than 10 percent of its total assets, would mainly affect its upstream business and leave BP with a smaller but higher quality exploration and production operation. The company chairman Carl-Henric Svanberg said the sales did not represent a change of strategy but were more about “adjusting the portfolio.”

In an emotional statement, Mr. Hayward, who had been chief executive since 2007, said his departure should allow BP to move forward and repair its reputation. “It’s a very sad day personally,” Mr. Hayward said. “I love this company and everything that it stands for” but “for it to move on, particularly in the U.S., it needs a new leadership.”

Mr. Hayward angered American policy makers and gulf fishermen with the way he handled the spill, and many investors regarded his departure as necessary even if they did not blame him personally for the disaster at the Macondo well. He is the second BP chief executive to leave following a major accident. His predecessor John Browne had lost support after a string of setbacks that included a blast at a Texas refinery in 2005 and leaking oil pipelines in Alaska.

BP said it planned to nominate Mr. Hayward as a nonexecutive director of TNK-BP, its Russian venture.

Mr. Dudley, 54, grew up in Mississippi and has been in charge of BP’s response to the spill for the last month. His appointment was widely expected among analysts and investors, who are hoping that he can help repair BP’s reputation in the United States, where it is most tarnished. BP has about a third of its business interests and 40 percent of its shareholders and employees in the United States.

BP has succeeded in stopping oil from spewing into the gulf, but the company is still drilling relief wells and will have to deal with the spill’s consequences for some time. Mr. Dudley’s experience in running BP’s joint venture in Russia, where he clashed in 2008 with the company’s business partners and the Russian government, is expected to help him in mending relations with Washington and residents of the Gulf Coast. BP will need political backing if it seeks to drill new wells in the gulf, as some investors hope it will.

Mr. Dudley will also have to rebuild morale among employees who had just watched their company recover from the aftermath of the deadly explosion at its Texas City, Tex., facility only to witness another tragic accident.

He has been with BP since it bought Amoco in 1998, and he said he had been shocked by the damage caused by the spill when he visited the region in June.

“The charge is bigger than expected, but I’m not disappointed,” said Nick McGregor, investment manager at Redmayne-Bentley, a stock brokerage firm in Britain. “They are trying to draw a line under this and get Bob a clean sheet to move forward, but the difficulty is that the litigation challenge persists.”

BP’s shares rose 4.6 percent in London Monday when BP’s board met to discuss the leadership changes. They were up 0.1 percent on Tuesday. The company has lost about 35 percent of its market value since the April 20 explosion of the Deepwater Horizon rig, although shares have rebounded from the lows registered a few weeks ago.

Mr. Hayward, asked how he felt about the oil spill given that he pledged to improve safety standards in light of the Texas City explosion, said he “was determined not to have a repeat” of such an accident but “sometimes you step off the pavement and get hit by a bus.”

Add comment

Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
Cooper Law Firm

Follow Us

© Stuart H Smith, LLC
Share This