/ 26 July 2010

BP’s Hayward to step aside as Gulf work resumes

BP was expected to announce changes at the top on Monday with the anticipated departure of CEO Tony Hayward, who came under fire for his handling of the massive oil spill in the Gulf of Mexico.

Hayward would be replaced by Bob Dudley, an American executive who is now managing the oil spill response operation, according to sources close to the British oil giant.

Hayward was widely criticised in the United States for complaining he wanted his “life back” weeks after the April 20 Deepwater Horizon offshore rig explosion that killed 11 workers and led to the worst oil spill in US history.

He was also lambasted by angry American lawmakers at a congressional hearing, where he was accused of ducking responsibility for the spill.

The sources said BP’s board, meeting in London, would discuss a plan for Hayward’s departure on Monday. The boardroom drama unfolded as the company was due to report second-quarter results on Tuesday.

Analysts at Barclays bank said BP could report a loss for the second quarter of $13-billion as it makes provisions of up to $25-billion for the cost of the oil spill — far outweighing an expected 77% jump in underlying profits.

BP’s efforts to contain the gushing oil have been watched closely by investors because its ultimate costs may hinge on how much oil is determined to have flowed into the Gulf.

BP, which has lost 40% of its market capitalisation since the blast that caused the spill, would not comment on the reports and said Hayward remained the CEO, with the full support of the board and management.

With the well sealed since July 15 by a temporary cap, the board’s concern has shifted to the market’s preoccupation about Hayward’s future, which is making it hard for the company to move forward, the sources said.

Moving on
Clearing weather in the spill zone allowed work to resume on drilling a relief well to plug the leak that has spewed millions of gallons of oil into the Gulf for three months.

A Transocean rig was reconnecting equipment, a BP spokesperson said. Other vessels that had left the region on Friday to get out of the path of what was Tropical Storm Bonnie were also returning.

As remnants of the storm dissipated on Saturday, the head of the US spill response, Thad Allen, said a “static kill” operation to plug the well with heavy drilling mud and possibly cement could start in three to five days.

Although vessels were returning to the site on Sunday, Allen said the storm could push back BP’s mid-August target date for completing the relief well, seen as the only permanent fix to the leak, by seven to nine days. – Reuters