New BP chief confident company will recover

BP’s incoming chief executive said the Gulf of Mexico spill had been a “wake-up call” for the entire oil and gas industry.

Bob Dudley, who will take the helm from Tony Hayward in October, pledged to put the oil giant on the “road to recovery” after investors were left reeling under a $32.2bn (€24.7bn) blow from the disaster.

The financial hit sent BP crashing $17bn (€13bn) into the red for the April-June period following the Deepwater Horizon tragedy – its first loss in 18 years.

US citizen Mr Dudley, who becomes BP’s first overseas chief executive, insisted the company had learnt lessons from the disaster, which he said was a “wake-up call not only for BP, but the oil and gas industry overall”.

Mr Hayward yesterday told reporters he had no major regrets about his leadership of the group since 2007 and that his decision to leave was a purely practical one but claimed he had been “demonised and vilified” over the spill.

He said: “This is a very sad day for me personally. Whether it is fair or unfair is not the point. I became the public face (of the disaster) and was demonised and vilified. BP cannot move on in the US with me as its leader ... Life isn’t fair.”

He added: “Sometimes you step off the pavement and get hit by a bus.”

Mr Dudley said he did not underestimate the task ahead but added that BP was “financially robust” and boasted “enviable” assets and staff.

“I believe this combination – allied to clear, strategic direction – will put BP on the road to recovery,” he said.

The huge charge includes the direct costs of tackling the spill, clean-up costs for the catastrophe and a $20bn (€15bn) compensation fund agreed in June.

But the longer-term fall-out such as fines, penalties and potential legal action will inevitably add to the bill and spread the pain over a number of years.

BP also hopes to sell around 10% of its production assets over the next 18 months, with the aim of raising $30bn (€23bn) to beef up its balance sheet to meet the crisis.

Meanwhile Mr Hayward, who drew fire for a series of PR blunders since the crisis began, leaves with a pay-off of one year’s salary – £1.045m (€1.25m) – and an £11m (€13m) pension pot.

He will remain on the BP board until the end of November and was put forward as a non-executive director of the firm’s TNK-BP Russian joint venture.

BP chairman Carl-Henric Svanberg said the firm was “deeply saddened” to lose him but said the explosion – which left 11 workers dead – was a “watershed incident”.

“It will be a different company going forward, requiring fresh leadership supported by robust governance and a very engaged board,” Mr Svanberg said.

Mr Hayward joined the company in 1982 and has been chief executive since 2007. Before the spill he was credited for reviving the fortunes of the oil giant but said he would always feel a “deep responsibility” for the tragedy.

He said: “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 added: “BP will be a changed company as a result and it is right that it should embark on its next phase under new leadership.”

He said the company reached a “significant milestone” after the capping of the spewing well, while the sales will leave BP with a “smaller but higher quality” exploration and production business.

Shares in the firm fell 3% yesterday to 406p. Investors are awaiting the completion of relief wells below the sea bed which should finally cut off the flow of oil early next month.

BP is a staple holding for UK pension funds though shareholders already felt the pain after the firm scrapped dividends for the first time since the Second World War. They have to wait until 2011 to find out when payments will resume.

Stripping out the impact of the Gulf, BP said its underlying performance was “very encouraging”, with a 72% hike in profits of $5bn (€3.8bn) – meaning the company was in “robust shape” to meet its obligations.

The firm’s refining and marketing operations posted their best performance since 2006, when refining margins were double their current levels. The US operations also returned to profit for the first time in more than a year.

Higher prices for oil and gas also helped its exploration and production business grow profits despite a 4% fall in production on last year due to disruption caused by the oil spill.

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