Mississippi native set to run BP will have to ensure company’s U.S. survival


Robert Dudley’s biggest challenge at BP Plc will be to ensure the London-based company’s survival in the U.S., where it’s the largest oil and gas producer.

Dudley, poised to become the first American head of the former U.K. state oil company, will need to convince politicians BP should be allowed to keep drilling in the U.S. after a runaway well in the Gulf of Mexico caused the country’s worst oil spill. The Gulf is home to about 25 of the 40 production projects BP plans by 2015.

“It’s a wise choice to pick an American,” said Gudmund Halle Isfeldt, an analyst at DnB NOR ASA in Oslo. “This will take off some of the pressure, but not all of it. For the first time, they can start looking ahead to the future of BP.”

BP’s reputation in the U.S., home to about 40 percent of its shareholders, has been battered by the Gulf disaster. The oil company faces a likely bill of more than $30 billion to pay the cost of cleaning up the spill and compensating its victims. Criminal charges against BP are almost inevitable, according to legal analysts.

The board will meet today to decide on Dudley as Tony Hayward’s successor, according to two people with knowledge of the matter. BP said in a statement today that no final decision has been made on management changes.

For BP to “remain a strong and viable in the U.S., it has a great deal of work to do,” Dudley said in an interview last month.

Gulf Roots

Dudley’s Gulf coast roots and 30 years of industry experience may ready him to lead the biggest oil producer in the U.S. In a battle for control of BP’s Russian joint venture with a group of billionaires two years ago, Dudley, 54, survived raids by Vladimir Putin’s secret service before being forced to leave the country. As head of drilling in Africa, he oversaw Angola, where BP now pumps from 11 deepwater fields.

Dudley’s nomination “would be positive, and most certainly it would be a strong political move, because he is now in charge of Gulf of Mexico clean-up operations,” said Dirk Hoozemans, who helps manage the equivalent of $19.4 billion at Rotterdam- based Robeco Group and doesn’t own BP. “He also has the political negotiation skills since he did a good job heading up TNK-BP” in Russia.

‘Remain Strong’

One of his tasks may be to overcome measures being considered by U.S.’s Congress to bar BP from new offshore leases to drill for hydrocarbons.

Dudley, who was born in New York and grew up in Mississippi, holds a degree in chemical engineering from the University of Illinois and an MBA from Southern Methodist University. He’s married with two children.

He served as one of former BP CEO John Browne’s executive assistants, a position that traditionally leads to bigger roles. Browne wrote in his memoir of how his assistants were known as “Turtles” after the Teenage Mutant Ninja Turtles, because of “their speed and ability to appear whenever they were needed.”

Dudley ran Amoco Corp.’s Russian operations from 1994 to 1997, before its 1998 acquisition by BP. Before running TNK-BP, Dudley oversaw BP’s exploration and production across Russia, the Caspian, Angola, Algeria and Egypt.

“I don’t believe we could have a better person to lead this organization,” current CEO Tony Hayward said last month when he announced Dudley’s role in heading the unit that will take responsibility for the spill.

Biloxi Summers

Dudley grew up in Hattiesburg about 80 miles north of the Gulf Coast and spent summers in Gulfport and Biloxi along the water. During a visit to the area in June he said the damage caused by the spill hit him hard.

“What I saw was painful and emotional, and shocking,” Dudley said after a trip to Louisiana.

Dudley has been a regular on the U.S. television circuit since the early days of the crisis, defending the company’s strategy, and has also sought to spread BP’s message to a business audience.

“Operating at the frontiers of any industry is risky, and it is that trade-off that governments, people, and industry will make together,” he told executives in Boston on May 6.

Dudley’s latest role will put him in front of the world’s media, a spot he last encountered as head of BP’s TNK-BP unit in Russia between 2003 and 2008.

Strategy Disputes

BP’s Russian partners called for Dudley’s dismissal in 2008 in a dispute over strategy at Russia’s third-biggest oil company, alleging he ignored their interests. He denied the charge.

Workers seconded by BP were barred from working in Moscow, while the successor to the Soviet KGB raided its office and an employee was charged with industrial espionage. In the end, Dudley fled the country, citing “sustained harassment” amid court battles and labor and tax inspections.

Dudley continued to run the unit from an undisclosed location, only stepping down as part of a settlement between the factions reached in September 2008.

His efforts in Russia were rewarded with a place on BP’s board and the appointment as managing director for government relations and non-operational matters in the Americas and Asia.

“Surviving Russia shows Dudley can tackle a lot of stress and strain,” said DnB’s Isfeldt. “He maintained BP’s assets in Russia. He is able to work with strong counterparts. This should mean BP can continue into the future without becoming a fully declining oil company.”

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