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BP’s Dudley Ousts Inglis in Post-Spill Reorganization

BP Plc’s Robert Dudley
BP Plc’s Robert Dudley, seen here, said in a statement today, “These are the first and most urgent steps in a program I am putting in place to rebuild trust in BP.” . Photographer: Michael Fein/Bloomberg

BP Plc’s Robert Dudley ousted Andy Inglis, head of drilling at the time of the Gulf of Mexico oil spill, and set up a safety unit to oversee the company’s operations in a bid to restore its reputation.

In his first act before taking over as chief executive officer later this week, U.S.-born Dudley said he was splitting BP’s exploration and production division in three. Mark Bly, who authored an internal report into the causes of the spill released earlier this month, will head the safety division.

“These are the first and most urgent steps in a program I am putting in place to rebuild trust in BP,” Dudley said in a statement today. “The changes are in areas where I believe we most clearly need to act, with safety and risk management our most urgent priority.”

Dudley is seeking to draw a line under the Macondo well blowout, which led to the largest oil spill in U.S. history and left London-based BP facing billions of dollars in estimated costs and legal claims. Lawmakers have threatened to bar BP from new U.S. offshore leases because of its past safety record. The U.S. is responsible for about a third of the company’s oil reserves and 40 percent of production.

“Dudley’s got to make his mark early on,” said Dougie Youngson, an analyst at Arbuthnot Securities Ltd. in London. “Inglis is the head of exploration and production, so the buck would stop with him.”

Shares Advance

BP rose 3.9 percent to 421 pence as of the 4:30 p.m. close in London, the highest since Aug. 9. The stock is down 36 percent since the April 20 Deepwater Horizon explosion that killed 11 workers and spewed crude oil into the Gulf of Mexico for almost three months.

The safety unit will have “sweeping powers” to monitor and audit the company’s operations around the world, BP said in the statement. It will have its own staff embedded in BP’s operating units and report directly to Dudley. The company will also examine how it rewards business performance.

“Our response to the incident needs to go beyond deepwater drilling,” Dudley said in the statement. “There are lessons for us relating to the way we operate, the way we organize our company and the way we manage risk.”

Dudley divided Inglis’s former unit into three with an expanded management team. Exploration will be led by Mike Daly, a BP veteran of 24 years; Bernard Looney, who previously ran the company’s North Sea business, will take charge of development; and Bob Fryar will head up production.

Hopwood Appointment

Andy Hopwood, who helped drive BP’s businesses in Venezuela, Azerbaijan, Trinidad and North America Gas, was appointed executive vice president of E&P strategy and integration.

Inglis will step down from BP’s board on Oct. 31 and leave the company at the end of the year. He is the second top executive to stand down after outgoing CEO Tony Hayward came under fire for his handling of the crisis.

“BP will come up with all sorts of fireworks to show that there will be radical change at the company,” said Christine Tiscareno, an equities analyst at Standard & Poor’s in London. “The company is like a huge supertanker that will take a lot of maneuvering to turn around, but they only have a few weeks to show they’re different. This is not the end.”

BP pledged to carry out a review of how it manages third-party contractors after its internal investigation into the accident found the company had direct involvement in just one of eight judgment errors and equipment failures. BP spread the blame for the spill to rig owner Transocean Ltd. and contractor Halliburton Co.

Leading Candidate

Before the leak, Inglis, 51, had been seen by analysts as one of the leading candidates to succeed Hayward.

Under Inglis’s management, BP’s Gulf oil and gas production rose about eightfold to 400,000 barrels of oil equivalent a day this year. The producer also more than doubled the water depth at offshore fields where it pumps oil and gas.

He took over as head of exploration and production from Hayward in 2007, when the latter was tipped for the top job. Inglis was Hayward’s deputy for about three years before the promotion.

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