BP – Operator of Azeri Offshore Oil Deposits - To Make Bernard Looney CEO
Bernard Looney, who will replace Bob Dudley as chief executive of BP when he retires next year, faces the tricky task of navigating the energy major through a rising tide of environmentalism and the move to a low-carbon economy.
BP (BP.L) on Friday appointed Looney, head of upstream, to succeed Dudley, who led the oil and gas company back to growth from near collapse in 2010.
As CEO, Looney will be charged with continuing to adapt BP to the transition to lower-carbon energy as pressure from investors grows to meet targets under the 2015 Paris Climate Agreement.
Looney, 49, took charge of BP’s oil and gas production, or upstream operations, in 2016 as the sector grappled with the aftermath of the 2014 collapse in oil prices.
The Irishman’s energetic management style was quickly felt as he spearheaded BP’s drive to improve performance through cost cutting and digitalization.
He has led BP through some of its fastest growth in oil and gas production, as output has risen by around 20% since 2016 with the launch of more than 20 major projects around the world and the acquisition of BHP’s U.S. shale assets this year for $10.5 billion - BP’s biggest deal in three decades.
“Bernard is a terrific choice to lead the company next,” Dudley, who turned 64 last month, said in a statement. “He knows BP and our industry as well as anyone but is creative and not bound by traditional ways of working. I have no doubt that he will thoughtfully lead BP through the transition to a low-carbon future.”
BP shares were up 1.1% by 1030 GMT in London, compared with a 0.74% gain for rival Royal Dutch Shell (RDSa.L).
BP took a number of steps in recent years around climate such as setting partial carbon emissions-reduction targets and investing in renewable energy. But many investors and activists say the 110-year-old firm needs to do more.
Dudley, who took the helm months after the 2010 Deepwater Horizon spill in the Gulf of Mexico, the largest oil spill in U.S. history that left 11 rig workers dead, has resisted setting wider climate targets, often quoting the fear of litigation.
As Looney takes over, climate is bound to be central. “Given the drive for digital solutions and the work on reducing carbon emissions it is likely that the appointment of Mr Looney as CEO may accelerate the journey that BP is on regarding the energy transition,” Barclays analyst Lydia Rainforth said in a note.
NEAR-BUST TO BOOM
Dudley will step down as CEO after the company’s full-year results on Feb. 4, 2020 and will retire on March 31, BP said.
Dudley, who succeeded Tony Hayward, led the company through near-bankruptcy after the spill and through an oil price crash four years later.
Preparations for Dudley’s departure were accelerated after Helge Lund became BP chairman in January with a mandate to oversee succession plans.
Dudley has had to navigate a vast asset disposal to pay for more than $60 billion in litigation and clean-up costs followed by a landmark settlement with U.S. authorities.
Dudley has had overwhelming support from investors at BP’s annual general meetings, however a majority of shareholders opposed his 2016 pay package, forcing the company to slash it by 40%.
Dudley's decade at the helm of BP almost didn't happen
BP Chief Executive Bob Dudley’s decade at the helm of one of the world’s biggest oil companies almost didn’t happen.
Dropped into the role in 2010 after the Gulf of Mexico oil spill disaster, 11 rig workers had just died and the company’s finances were teetering.
Dudley had lived in Mississippi in his youth and spent his holidays fishing on the Gulf. He was now put in charge of cleaning up the biggest environmental disaster in U.S. history in those very waters.
As BP scrambled to contain a crisis that threatened to take down a company after more than 100 years of operation, investors were running scared. Its market valued halved in two months as the scale of the disaster unfolded.
Dudley received an early morning phone call that marked what would be the “worst moment”, he told Reuters in an interview last year.
“When I heard that our debt was untradable back in the summer of 2010... To me that was a moment of the unthinkable was possible.”
The feared collapse of BP did not come, but the onslaught did, with BP facing clean-up costs and lawsuits that would eventually top a staggering $75 billion.
Dudley needed to sell oil and gas assets to find the money and so the sell-off began, with BP eventually doing deals worth over $60 billion, including selling prized assets such as its Texas City refinery, Gulf of Mexico oilfields and Russian joint venture.
He shrank BP, but the drastic diet left Dudley in charge of a company fitter than some of rivals when the next challenge hit in the form of 2014’s collapse in oil prices.
The slide would roll into early 2016, with Brent crude oil LCOc1 prices falling more than 70% to levels not seen since 2003 and companies reeling to cut costs.
Born in New York, Dudley grew up in Mississippi and later moved to Illinois where he attended university.
He entered the oil world in 1979 when joining U.S. firm Amoco, where he held a number of roles including working in Russia before BP took over the company in 1998 and retained his services.
His Russian experience helped Dudley win the top job at BP’s Russian joint venture TNK-BP venture in 2003.
Five years later Dudley made global headlines as he fled Russia fearing for his life after falling out with Russian oligarchs who accused Dudley of favoritism towards BP employees.
Dudley in turn accused the oligarchs of using the Kremlin and other Russian authorities to help settle purely commercial disputes.
Despite the clash, Dudley’s composed managerial style would again shine through as he later became one of the Kremlin’s closest Western business allies.
BP and the oligarchs would later sell TNK-BP to Russian oil producer Rosneft for over $50 billion. A quarter of BP’s oil production now originates from Russia.
In March, Dudley helped organize a meeting between Russian President Vladimir Putin and top UK businesses in a bid to smooth relations damaged by the poisoning in Britain of former double agent Sergei Skripal, for which Britain blames Russia.
“He has led BP in a very wise, calm way over the last decade,” BP Chairman Helge Lund told Reuters in an interview in June.
Dudley oversaw not only BP’s recovery from near collapse in 2010 but its rebound from the 2014 oil crisis.
But he leaves with one major unfinished task, namely, BP’s transition to greener energy and lower emissions.
Although BP has agreed to set targets to reduce some of its carbon emissions and increase spending on renewables, critics say under Dudley BP has done too little to reduce carbon emissions and increase investment in renewable energy.
Instead, it has posted its fastest expansion in oil and gas production in decades, rising some 20% since 2016.
“From the aftermath of the Deepwater Horizon oil spill disaster to the climate emergency, Bob Dudley’s tenure as BP’s boss has been a failure,” said John Sauven, executive director at Greenpeace UK.
“These valuable years should have been used to end the expansion of fossil fuels.”
Shareholders have also expressed criticism, rejecting his pay package in 2016 and forcing BP to cut it by 40%.
Dudley, who turns 65 next September, will step down in February to make way for successor Bernard Looney, BP’s current head of upstream operations.