September 30, 2010 / 12:28 AM / 9 years ago

BP ousts exploration chief, vows to boost safety

LONDON (Reuters) - BP Plc’s incoming Chief Executive Bob Dudley has ousted the oil group’s exploration and production chief following the Gulf of Mexico oil spill and promised to restructure the company to boost safety.

A logo is seen at a BP fuel station in London July 27, 2010. REUTERS/Toby Melville

Echoing a move BP made after the Texas City blast in 2005, Dudley also said on Wednesday he was appointing a new safety guru, Mark Bly, who would ensure safe practices across the organization.

BP shares closed up 3.9 percent at 421 pence, against a 0.2 percent drop in the STOXX Europe 600 Oil and Gas index.

Andy Inglis, the head of its upstream Exploration and Production, becomes BP’s second senior executive casualty of the spill following Dudley’s replacement of Tony Hayward, who enraged U.S. public opinion during the crisis with his gaffes.

The blown-out well came under the remit of Inglis’s unit, and BP insiders have predicted his departure for months.

He will leave at the end of the year with a year’s salary of 690,000 pounds ($1.1 million) in lieu of notice and will retain his pension pot valued at 6 million.

Bly’s role will be stronger than previous safety chiefs, a BP spokesman said, because he will have representatives in each business unit that will have the authority to intervene if they feel practices are not meeting BP’s safety standards.

BP said it was also reviewing its system of incentives, which critics have said encouraged managers to put profits and cost-cutting ahead of safety.

“We will refine the checks and balances at all levels ... I want us to sharpen our everyday attitude to operational and technical risk — to ensure it is the norm for people on the frontline to speak up about risk and for managers to listen,” Dudley said in an email to staff seen by Reuters.

“There is a pressing need to rebuild trust in BP around the world,” Dudley added.

Neither in the official or internal statements did Dudley admit that safety failings particular to BP played a role in the oil spill.

Instead, he repeated BP’s position that the disaster highlighted industry shortcomings — a line of argument which has enraged BP’s rivals, who accuse the London-based company of having a weak focus on safety and technical excellence.

BOLD STEPS

Analysts said investors would be encouraged that Dudley appeared to be willing to take bold steps and that BP was increasing its focus on safety.

“It plays well to the U.S. government and to investors who worried that BP had not been as safety conscious as some of its rivals, although we have to see more detail to know how it will work,” said Iain Armstrong, oil analyst at Brewin Dolphin.

A blowout in April at BP’s Macondo well caused an explosion on the Deepwater Horizon drilling rig that killed 11 men and unleashed America’s worst ever oil spill.

Fears about the final bill for the disaster, along with concerns that BP’s battered image in the United States could make it hard for the company to exploit its assets there, have wiped around $60 billion off the company’s stock market value.

Europe’s second-largest oil company by market value said it was also splitting up its core upstream division into three units: exploration, project development and production, with the aim of fostering technical expertise.

Inglis said in an email to staff seen by Reuters that the change would be implemented over the next month.

BP’s internal probe into the disaster revealed its main representative on the drilling rig, and possibly his colleagues onshore in Houston whom he may have consulted, were unable to correctly read a basic safety test, thus missing an opportunity to avoid the blast.

BP has laid most of the blame on its contractors, but rivals said BP’s own account of the disaster showed its practices fell short of industry standards.

BP LIFER

Dudley will expand the top management team to include Bly, the heads of the three upstream units, and a new head of strategy and integration.

Evgeny Solovyov, oil analyst at Societe Generale, said there was a risk that the additional safety oversight and top management positions could slow down decision-making at the company.

“I am concerned that BP might become too bureaucratic,” he said, though he agreed it was crucial for BP to send a message that it was taking safety more seriously if it wanted to preserve its U.S. growth hopes.

“BP is in image rebuilding mode,” Solovyov said.

(Editing by Dan Lalor, David Holmes and Will Waterman)

$1=.6327 Pound

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