UPDATE 1-BP reorganises core oil and gas production unit

Wed Jan 30, 2013 9:52am EST

By Tom Bergin

LONDON Jan 30 (Reuters) - BP said it was making ten senior management changes in a reorganization of its core oil and gas production unit, continuing a reversal of the structure adopted in the wake of the Gulf of Mexico oil spill.

The move is the latest in BP's struggle to return to normal as it continues to tackle legal challenges in the United States and a share price a long way short of its pre-spill levels.

Lamar McKay, Head of the Upstream division, which finds and pumps oil and gas, told staff of the changes in a series of emails seen by Reuters.

A spokesman confirmed the emails, which were sent on Tuesday, and said the changes reflected McKay's desire to put together his own leadership team for the division which is responsible for most of BP's profits.

The restructuring follows McKay's appointment late last year. From Dudley's appointment as CEO in Oct. 2010 until McKay took up his job, Dudley had overseen the oil exploration and production operations, which in turn had been arranged into three different operating units.

"Dudley felt that upstream had become too independent before the spill. Now he probably feels he doesn't need to keep such a close eye on it," said one analyst who asked not to be named.

U.S. government reports blamed poor risk management by BP, and some mistakes by its contractors, for the April 2010 rig blast that killed 11 men and led to the oil spill.

Analysts and industry peers said BP's practice of giving oil field and refinery managers a high degree of independence in how they hit targets had contributed to its weak risk management.

Dudley reduced this independence and a spokesman said the practice of having tight, global reporting lines for functions would continue.

As part of the changes, former head of the now abolished developments group, Bernard Looney, 42 -- tipped by some internally as a possible future leader of the company -- becomes Chief Operating Officer, Production.

Former head of the Production grouping, Bob Fryar, 49, has moved out of Upstream to become group head of safety, replacing Mark Bly, 55, who is retiring.

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