BP's Dudley Signals U.S. to Stay Cornerstone of Its Business
Robert Dudley, BP Plc’s new man in charge of cleaning up the Gulf of Mexico oil spill, signaled the company will keep U.S. assets while it sells other interests to help cover costs related to the disaster.
While a BP team is identifying U.S. assets to guarantee a $20 billion fund demanded by the Obama administration for victims of the spill, Dudley said oil properties sold will be “geographically separated” from BP strongholds. The company will soon appoint advisers for the asset review, he said in an interview in BP’s Washington offices.
With the pressure and criticism mounting on BP Plc Chief Executive Officer Tony Hayward, Dudley was appointed two weeks ago to take charge of the cleanup of the worst oil spill in U.S. history. He’s tasked to regain the confidence of regulators, investors and politicians in the U.S., which provided about 33 percent of BP’s first-quarter exploration and production profits. Dudley will eventually move to Washington.
For BP to “remain strong and viable in the U.S., it has a great deal of work to do,” Dudley said. A U.S. backlash against BP puts at risk a business built through $100 billion of acquisitions, an operation representing about 26 percent of the company’s global oil and gas production.
BP is reviewing its holdings for potential asset sales, Dudley said. The company plans to initially raise $10 billion. Properties to be considered include those not large enough to justify being held by an oil company the size of BP.
“We are going to have to sharpen the portfolio to pace ourselves for what has happened in the U.S.,” he said.
U.S. Representative Bart Stupak, who chairs a congressional subcommittee investigating the April 20 rig explosion that killed 11 workers and started the oil leak, suggested last week the history of disasters and fatalities at BP facilities could justify banning the London-based company from doing business in the U.S.
On June 18, BP was accused by its partner in the damaged well, Anadarko Petroleum Corp., of “reckless decisions and actions.” BP rejected the allegations.
Dudley, 54, BP’s managing director for the Americas and Asia, was born in New York and grew up in Mississippi, part of the Gulf Coast region suffering from the environmental and economic damage of the gushing oil well.
He’s spent about 30 years in the oil industry, including a stint as CEO of BP’s Russian joint venture, TNK-BP from 2003. That job ended after disputes with Russian partners led to Dudley fleeing Russia in 2008, citing “sustained harassment” amid court battles and labor and tax inspections.
Dudley’s new role has led to speculation he may be in line to succeed Hayward after BP Chairman Carl-Henric Svanberg’s mention of a switch between Dudley and Hayward in the Gulf in a June 18 television interview.
Hayward has been criticized for public relations gaffes since the spill and was attacked again for attending a U.K. yacht race on June 19 around the Isle of Wight.
“I think we can all conclude that Tony Hayward is not going to have a second career in PR consulting,” White House Chief of Staff Rahm Emanuel told ABC news.
Dudley said that BP’s CEO, who is to remain in overall command, has shown strong leadership “from the very beginning” of the disaster. A BP spokesman said Hayward’s sailboat racing was “a private matter.”
The deal Hayward and Svanberg negotiated with President Barack Obama at the White House on June 16 was a first step in BP’s rebuilding strategy.
The company agreed to create a $20 billion account with an independent administrator to reassure Obama and claimants that BP would face its responsibilities for damages, while at the same time “giving more comfort to our shareholders about the nature and timing of those obligations,” Chief Financial Officer Byron Grote said at the time.
As BP makes progress at capturing more oil from the damaged well, it faces accusations on other fronts about the rig explosion.
“BP’s behavior and actions likely represent gross negligence or willful misconduct and thus affect the obligations of the parties under the gross operating agreement,” said Jim Hackett, chairman and CEO of Anadarko, a 25 percent owner of the stricken well.
Anadarko, whose $8.2 billion of revenue last year is 3.4 percent of BP’s, will have a greater difficulty paying billions in claims and fines.
“Anadarko hit a major bump that’s completely going to change the course of this company no matter what they do,” said Fadel Gheit, an analyst at Oppenheimer & Co. in New York.
BP said it “strongly disagrees” with Anadarko. Hayward said in a statement that Anadarko’s allegations will “neither distract the company’s focus on stopping the leak, nor alter our commitment to restore the Gulf coast.”