BP's 1st American CEO to take over Oct. 1
Company sets aside $32.2B for cleanup costs
American Robert Dudley will become BP's first non-British chief executive, the company said Tuesday as it reported a record quarterly loss and set aside $32.2 billion to cover costs of the Gulf of Mexico oil spill.
Ending weeks of speculation, BP confirmed that gaffe-prone Tony Hayward will step down Oct. 1 as the London-based company seeks to reassure both the public and investors that it is learning lessons from the spill.
BP said the decision to replace Hayward, 53, was made by mutual agreement.
In a mark of faith in its outgoing leader, the company said it planned to recommend him for a non-executive board position at its Russian joint venture and will pay him £1.045 million ($1.7 million), a year's salary, in lieu of notice.
"The BP board is deeply saddened to lose a CEO whose success over some three years in driving the performance of the company was so widely and deservedly admired," BP chairman Carl-Henric Svanberg said in a statement accompanying the quarterly earnings update.
Svanberg said the April 20 explosion of the Deepwater Horizon platform run by BP in the Gulf of Mexico has been a "watershed incident" for the company.
"BP will change as a result of this accident," Svanberg told investors during a webcast presentation on the company's second-quarter results, which revealed a record $17-billion loss.
"We are taking a hard look at ourselves, what we do and how we do it. What we learn will have implications for our ways of working, our strategy and our governance."
Dudley told reporters Tuesday that he recognizes the complexity of what BP has to do to restore its financial strength and its reputation.
The oil spill, he said, has been a "wake-up call not only for BP, but the oil and gas industry overall, and we will be looking deeply at our review of operational safety and what we have learned from this spill."
Hayward had been a well-regarded chief executive. But his promise when he took the job in 2007 to focus "like a laser" on safety came back to haunt him after the explosion on the Deepwater Horizon rig killed 11 workers and unleashed a gusher of oil.
Protests in London
Greenpeace members in England protested Tuesday by blocking the entrances of 50 BP service stations in central London.
They also draped banners over the price towers with a different version of the BP logo: one that shows the green and yellow sun-shaped icon sinking into an oil-covered sea.
Reporting from London, CBC reporter Chris Brown said the environmental activists were trying to draw attention to the need for a clean energy policy and hope to find an ally in Bob Dudley, who will take over as BP's CEO in October.
Hayward became the lightning rod for anti-BP feeling in the United States and didn't help matters with a series of gaffes, raising hackles by saying "I want my life back," going sailing, and what was viewed as an evasive performance before U.S. congressmen in June.
In a statement on Tuesday, Hayward said it was right that BP embark on its next phase under new leadership.
"The Gulf of Mexico explosion was a terrible tragedy for which — as the man in charge of BP when it happened — I will always feel a deep responsibility, regardless of where blame is ultimately found to lie," he said.
On top of the $1.7-million payout, Hayward retains his rights to shares under a long-term performance program that could eventually be worth several million pounds if BP's share price recovers. The stock has lost around 40 per cent since the well explosion.
Hayward, who will remain on the board until Nov. 30, will also be entitled to draw an annual pension of $956,000 from a pension pot valued at around $17.5 million.
In an interview Tuesday morning, Dudley said stopping the leak in the Gulf of Mexico would be his "No. 1 focus."
"What's first on my agenda is to make sure we do seal that well, that the effort contains the spill, that we clean up the beaches, that we restore the Gulf, and we'll be doing that for a long time," Dudley told ABC's Good Morning America.
"Particularly over the next month and a half, I'll be back in the States working on that full time," he said.
Svanberg has described Dudley, 54, who was thrown out of Russia after a battle with shareholders in the company's TNK-BP joint venture, as a "robust operator in the toughest circumstances."
Currently BP's managing director, Dudley grew up partly in Hattiesburg, Miss., and has so far avoided any public missteps. He spent 20 years at Amoco Corp., which merged with BP in 1998, and lost out to Hayward on the CEO slot three years ago.
Dudley will be based in London when he takes up his appointment and will hand over his present duties in the United States to Lamar McKay, the chairman and president of BP America.
BP said that the $33.1-billion charge for the cost of the spill led it to record a loss of $17 billion for the second quarter. The charge includes the $20.6 billion compensation fund the company set up following pressure from U.S. President Barack Obama as well as costs to date of $3 billion.
But the company also stressed its strong underlying financial position — revenue for the quarter was up 34 per cent at $78.1 billion — and Hayward said it had reached a "significant milestone" with the capping of the leaking well.
Work on well proceeds
Crews were restarting work to plug the leaky Gulf well after the remnants of tropical storm Bonnie blew through, forcing a short evacuation. The U.S. government's oil spill chief, retired Coast Guard admiral Thad Allen, said Monday that the so-called static kill — in which mud and cement are blasted in from the top of the well — should start Aug. 2.
If all goes well, the final stage — in which mud and cement are blasted in from deep underground — should begin Aug. 7.
BP said the bottom kill could take days or weeks, depending on how well the static kill works, meaning it will be mid-August before the well is plugged for good.
Hayward said the company expects to pay the "substantial majority" of the remaining direct spill response costs by the end of the year.