LONDON – BP is jettisoning CEO Tony Hayward, whose verbal blunders made the oil giant’s image even worse as it struggled to contain the Gulf of Mexico oil spill, and will assign him to a key job in Russia, a person familiar with the matter said Monday.
Hayward is set to step down in October and take a post at TNK-BP, the company’s joint venture in Russia, according to the person, who spoke on condition of anonymity because an official announcement had not been made by the British company’s board.
The move was being made more than three months after an oil rig explosion set off the spill and less than two weeks after a temporary cap finally stopped the oil from leaking. The government’s oil spill chief, retired Coast Guard Adm. Thad Allen, said Monday that efforts to solidly seal BP’s busted deep-sea well are set to begin in a week.
Moving Hayward gives BP a chance to make a fresh start.
BP executive Robert Dudley, an American who has been overseeing oil spill recovery efforts, is likely to be his successor.
“The sooner Bob Dudley is empowered to act as CEO, especially with regard to the U.S., the better it will prove to be for BP,” said Stephen Pope, the chief global equity strategist at Cantor Fitzgerald in London.
The board met Monday but it was unclear whether it had made the demotion official. A statement was expected early today, at the same time the company files its second-quarter financial results.
Hayward left BP’s headquarters after the board meeting without speaking to reporters. The Briton’s silver Lexus was mobbed by photographers, who chased the car down the tony street in central London.
Crown jewel
It’s not yet clear what Hayward’s role will be with TNK-BP, but the job suggests BP still holds more faith in Hayward than much of the U.S. public and political establishment do. Analysts consider the Russian venture one of BP’s crown jewels; it accounts for a quarter of the company’s production.
TNK-BP’s challenges are well known to Hayward’s likely successor as CEO, who used to run it. Dudley was forced to flee Russia in 2008 and ran BP’s interests there in absentia until that became untenable after a dispute with Russian shareholders.
Repeated calls to TNK-BP’s offices in Moscow went unanswered Monday.
BP owns half of the oil firm, which is Russia’s third-largest. Moving Hayward gives insiders who believed he was scapegoated for his off-the-cuff remarks – rather than his performance – a chance to keep a highly trained professional in the company.
“They still think highly of Tony Hayward, but they have to get him away from this situation,” said Phil Weiss, an oil analyst with Argus Research in New York. “TNK-BP is an important part of BP.”
Hayward, 53, was called back to London a month ago after a bruising encounter with a congressional committee and has since kept a low profile. There is persistent speculation that BP Chairman Karl-Henric Svanberg, who moved into the post on Jan. 1, is also likely to lose his job later this year.
In New York, BP shares rose Monday almost 5 percent, to $38.65 a share, as the stock market anticipated an formal announcement about Hayward.
The one-day board meeting comes a day before BP announces earnings for the second quarter. That report is expected to include preliminary provisions for the cost of the Gulf disaster, which analysts say could be as high as $30 billion.
Hayward’s remarks that the amount of oil pouring into the Gulf was “tiny” compared with its volume of water and his complaint that he would “like my life back” made him an object of scorn. He also was pilloried for spending a day at a yacht race at the height of the disaster.
‘Static kill’ soon
Allen, the Obama administration’s point man on the spill, indicated that Hayward’s departure would not significantly affect the government’s relationship with BP as it presses the company to plug the leak, clean up the mess and compensate people harmed by the spill.
“I talk to Bob Dudley when I need to. ... I woke him up on a number of occasions from time to time,” Allen said. “The communication is frequent. It also was frequent when Tony Hayward occupied that position. There’s no material difference in my level of communication with either one.”
Allen said the “static kill” – in which mud and cement are pumped into the top of the well – is expected to start Aug. 2.
A relief well is nearly complete for the final stage, a “bottom kill” in which mud and cement are pumped in from underground. Allen said work could begin Aug. 7 and could take days or weeks.
