June 25 (Bloomberg) -- BP Plc named Ericsson AB Chief Executive Officer Carl-Henric Svanberg to replace its chairman Peter Sutherland as Europe’s second-biggest oil company seeks to hold down spending amid lower crude prices.

Svanberg, 57, built his reputation by reviving the fortunes of the world’s biggest maker of wireless networks. Before joining Ericsson, Svanberg was CEO at Assa Abloy AB, where he created the world’s biggest lockmaker with at least 45 acquisitions and sevenfold sales growth.

Sutherland, 63, who has been chairman since 1997 and was due to leave in April, said in March he agreed to stay on as the “turbulent business environment” was hampering the search for a replacement. BP’s unexpected choice of the telecommunications executive echoes Royal Dutch Shell Plc’s appointment of former Nokia Oyj CEO Jorma Ollila as its chairman in June 2006.

“It’s clear that leading a global telecoms company provides you with a very, very good international business experience,” BP Chief Executive Officer Tony Hayward said in a phone interview. “The company is now back on track and it will keep growing well.”

Svanberg took the helm at Ericsson in 2003, becoming its fourth CEO in five years and arriving after seven quarters of losses totaling $4.7 billion. The Stockholm-based company was forced to cut more than half its 105,000-strong workforce and sell 30 billion kronor ($3.8 billion) of stock to cover debt and severance payments as phone companies cut costs.

Management Record

Before joining Ericsson, Svanberg was CEO at Assa Abloy since 1994. Assa Abloy was created from the merger of the lock businesses of Securitas AB and Finland’s Metra Oyj. Svanberg was previously head of alarms and locks at Securitas, the world’s largest security company.

Svanberg, who has a master of science degree from the Linkoeping Institute of Technology and a bachelor of science degree in management from Uppsala University, started his career at engineering company ABB Ltd.

“BP is a recognized world leader in the energy sector and it’s a great privilege to be invited to lead its board,” Svanberg said in a statement. “I’m hugely excited about joining the energy industry, which is so much at the heart of the global economy.”

Setback

BP said Svanberg would be based in London and devote most of his time to the oil company. He will join the BP board as a non-executive director on Sept. 1 and will remain as Ericsson CEO until he takes over as BP chairman at the end of the year. Ericsson named Chief Financial Officer Hans Vestberg to replace Svanberg as CEO as of Jan. 1.

BP suffered a setback in February when Paul Skinner, then chairman of Rio Tinto Group who was cited by The Times as a candidate, became embroiled in a shareholder dispute. Skinner stepped down at Rio Tinto in April.

Former BHP Billiton Ltd. CEO Paul Anderson had been in the running for the post, according to a person familiar with the matter earlier this month.

Hayward said the role of chairman won’t change with the appointment of Svanberg and the transition period should be “extremely smooth.”

BP in April reduced its 2009 spending target a second time and said cost cuts would exceed initial projections after first- quarter profit slumped 64 percent. Hayward said today that output will rise this year from 2008.

‘Pretty Confident’

“Volumes are growing faster than any of our competitors, costs are falling faster than any of our competitors and overall financial results are really quite strong,” Hayward said. “We are pretty confident that’s going to continue.”

Born in the Swedish town of Porjus, within the Arctic Circle, Svanberg used to play ice hockey for Bjoerkloeven’s junior team in Umeaa and held jobs including welder, dock worker and garbage man as a student. His main hobby is sailing.

While Svanberg brings experience of the telecommunications and engineering industries to BP, Sutherland’s background was in politics, finance and law. Sutherland is also chairman of Goldman Sachs International, and led talks between 1993 and 1995 as director-general of the General Agreement on Tariffs and Trade and subsequently the World Trade Organization.

Sutherland represented Ireland as European Union Competition Commissioner from 1985 to 1989, was chairman of Allied Irish Banks Plc from 1989 to 1993 and served as Ireland’s attorney general from 1981 to 1984.

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Last Updated: June 25, 2009 04:51 EDT