IE 11 is not supported. For an optimal experience visit our site on another browser.

Hayward to play reduced role in spill response

BP Chairman Carl-Henric Svanberg said Friday he will take on a more visible public role as CEO Tony Hayward transitions away from daily responsibility over the company's spill response.
/ Source: staff and news service reports

BP Chairman Carl-Henric Svanberg said Friday he will take on a more visible public role as CEO Tony Hayward transitions away from daily responsibility over the company's spill response.

"This has now turned into a reputation matter, a financial squeeze for BP and a political matter and that is why you will now see more of me," he told SkyTV in an interview.

At the same time he confirmed that Hayward will be handing over day-to-day responsibility for the spill response to managing director Bob Dudley.

Sheila Williams, a BP press officer, said Dudley would take over "when we stop the oil leaking out," but she did not have details on the timing of the handover. The change in Hayward's role was first disclosed June 4, when Hayward said BP will create a stand-alone organization to manage the company's long-term response to the spill. Dudley will report to Hayward.

Svanberg also said in the interview that BP remains in a strong financial position. "The company is strong, the company has strong underlying performance — strong cash flow, strong operations," he said.

Thomson Reuters reported on Friday that BP would be seeking loans of $1 billion each from seven banks to raise capital for a $20 billion fund to pay for the Gulf cleanup.

Hayward spent about seven hours on Capitol Hill Thursday getting grilled by lawmakers about the company's massive oil spill in the Gulf of Mexico 60 days ago and its response to it. Tens of millions of gallons of crude have spilled into the Gulf, and the underwater gusher is still not completely contained.

The disaster has killed wildlife, closed fishing grounds, fouled beaches and disrupted livelihoods for people in the Gulf states, many of whom were still trying to rebound from the effects of Hurricane Katrina in 2005.

Prior to the statement Svanberg's interview on SkyTV, investors and analysts speculated that Hayward could end up clinging to his job, while Svanberg's looked less secure.

Earlier this week, Svanberg was forced to apologize for speaking "clumsily" by referring to those hurt by the company's oil spill as "small people" following a White House meeting with President Barack Obama.

BP shares gained in London after Hayward managed to fend off attacks by a congressional panel, and as hopes rose its $20 billion oil spill compensation and clean-up fund would cool public anger and reduce investor uncertainty. The oil giant has also said it will suspend dividends for at least the rest of the year.

"Hayward's performance wasn't great, but it could have been worse. As a shareholder, our absolute top priority is to see that all energies are being diverted to cap this wretched well," one top-10 investor told Reuters on condition of anonymity.

"Our view is that Hayward is doing as much as can be done, but the chairman has not come out of this well at all. He's hardly been visible."

Another top-20 investor added: "From my perspective, it is going to be very, very difficult for the chairman to survive. The job needs someone who has some kind of credibility on the world stage, and the current guy clearly doesn't have that."

Other shareholders were keeping their powder dry until the oil well was capped.

"At the moment, we don't think that any debate on a management change would be particularly helpful. We have no interest in making the situation any worse than it already is," another top-10 investor said.

Dudley, who is taking over management of the spill response, is a member of BP's board of directors and of the oil giant's executive management team. According to a biography on BP's website, Dudley was educated in the United States with a degree in chemical engineering from University of Illinois and an MBA from SMU (Southern Methodist University).

He joined Amoco Corp. in 1979 and worked there until Amoco merged with BP in 1998.

Collins Stewart and Societe Generale raised their investment recommendations to "Buy" from "Hold", saying the share drop — about 50 percent since the April 20 spill — had been so severe that BP now offered good value.

Panmure Gordon analyst Peter Hitchens said: "There's more pressure on the chairman, who has been, sort of, at the initial stages, largely anonymous," said Hitchens.

"I think at this stage ultimately someone will have to go because it has been a huge embarrassment for BP."

"Obviously, everyone is looking for a scapegoat, but it doesn't necessarily have to be (Hayward). It could be the chairman," said Societe Generale analyst Evgeny Solovyov.