Jul 272010
Authors: Janet Stobart –– Los Angeles Times

LONDON –– BP confirmed Tuesday that Tony Hayward is stepping down as CEO as it posted a massive $17 billion loss for the second quarter of 2010.

The company also stated that $30 billion has been set aside to clean up the Gulf of Mexico after the Deepwater Horizon oil rig explosion in April. BP Chairman Carl Henric Svanberg confirmed in a BBC radio interview Tuesday morning that the company will also “divest assets of $25 (billion) to $30 billion, and that is to make sure that no one hesitates, there is no worry about our … ability to get through this.”

Hayward will be replaced Oct. 1 by American Robert Dudley, 54, who now heads the cleanup operation.

The agreement to release Hayward as CEO was “a mutual decision” said Svanberg. The 53-year-old executive will take up a directorship with BP TNK, BP’s Russian joint venture. He also leaves with a retirement package of $17 million.

Despite Hayward’s success as head of BP for the last three years, his tenure and his departure will be marked by the worst oil spill ever recorded. In his farewell statement, Hayward 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.”

“I believe the decision I have reached with the board to step down is consistent with the responsibility BP has shown throughout these terrible events. BP will be a changed company as a result of Macondo (its damaged oil well in the Gulf of Mexico) and it is right that it should embark on its next phase under new leadership.”

The company finances remain robust, Svanberg insisted, even though “it will be a different company going forward.”

As he confirmed on BBC radio, the company’s losses were huge “but the underlying performance of the company is actually strong, it continues to be strong, we have strong assets around the world, we have strong cash flow.”

In addition to the cleanup, BP must pay for wildlife rehabilitation and compensate Gulf residents who lost their livelihoods.

The company’s posted losses were “a first estimate,” said Svanberg. “it depends on how many claims come in.”

“That estimate is also based on our belief that we are not (guilty) of gross negligence,” he added.

In keeping with expectations, the company paid no dividends to shareholders for the last quarter, but the Financial Times reported Tuesday that BP shares had gone up by 1 percent in early London trading.

Dudley was president and CEO of TNK BP in Moscow until December 2008. Appointed to BP senior management in April 2009, he supervised BP operations in Asia and the Americas. He was appointed by Hayward to oversee the cleanup.

According to the Associated Press, Dudley grew up partly in Hattiesburg, Miss. 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.

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