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

Hayward will have few duties in new job

Tony Hayward is poised to move to a new job as a non-executive board member with few direct responsibilities at BP PLC's Russia venture, TNK-BP.
Tony Hayward
BP's outgoing CEO, seen in this image taken Tuesday in London, will be succeeded by American Robert Dudley.STR / AP
/ Source: The Associated Press

Tony Hayward is poised to move to a new job as a non-executive board member with few direct responsibilities at BP's Russia venture, TNK-BP.

He would not even need to spend much time in Russia, though his contacts in the Russian government and with the Russian shareholders would serve him well.

When Hayward steps down as BP's chief executive on Oct. 1, the British company said it would recommend him for the board of the Moscow-based firm it owns 50-50 with a group of Russian oligarchs. Hayward will continue to draw a BP salary of about $1.6 million for a year after he steps down.

Hayward is no stranger to TNK-BP, having served on its board from its creation in 2003 until 2007, when he was appointed BP's chief executive.

TNK-BP accounts for a quarter of BP's output, but its future has been in doubt for two years ago amid a bitter conflict between BP's managers and the Russian shareholders.

Robert Dudley, who will succeed Hayward as CEO, had been heading TNK-BP before being forced out of the country when Russian shareholders refused to renew his work permit. Seeking to put the spat behind them, the two sides agreed to introduce three independent directors to the board.

Each side now has four representatives. BP's include Lord George Robertson, the former NATO chief and British defense secretary, and BP's head of exploration and production.

The Russian oligarchs insist they hold no grudge against Dudley, with whom they differed on matters of strategy, and TNK-BP executive director German Khan said Tuesday he had congratulated Dudley on the new job.

New CEO Dudley faces daunting task in new job

Russian shareholders welcomed the planned appointment of Hayward, who "fell victim to circumstances" after the devastating Gulf of Mexico oil spill, Khan said.

"He is a qualified professional and has good leadership potential," Khan told the state RIA Novosti news agency.

Most of TNK-BP's 200 oil fields are situated far from open water in the Siberian tundra, although the company is looking to produce oil offshore in the Caspian Sea. The Russian government has never raised concerns about the safety of TNK-BP's operations.

TNK-BP, Russia's third-largest producer, reported its second-quarter results on Tuesday, saying its net profit dropped 8 percent but the company remains on track to boost production, which has been on a steady rise for nearly three years.

Analysts said Hayward would have much to contribute to the board.

"His familiarity with the various players and legal and political background of the Russian oil industry is very helpful," said Ron Smith, London-based head of Europe, Middle East and Africa research at brokerage Chevreux. "The transition will be easier for him than for anybody else that BP could assign to it."

When Hayward served on the company's board in 2003-07, he would travel to Moscow at least four times a year, and forged "excellent work contacts with partners in TNK-BP and representatives of the Russian government," BP's Moscow-based spokesman Vladimir Buyanov said.

Hayward's appointment is not expected to change TNK-BP's strategy to increase Russian output, expand overseas and go public in the next few years.

"If we're talking about expansion outside Russia, a man like Hayward will be an asset" with "nearly 30 years of experience with BP," said Alexander Burgansky, co-head of equity research at Renaissance Capital.

As a non-executive director, Hayward would not be responsible for day-to-day operations and would not need to move to Moscow, especially as TNK-BP has held many of its board meetings outside Russia in recent years, in countries including Cyprus and the Czech Republic.

But he would still face plenty of work in shaping TNK-BP's strategy along with some of Russia's richest men, eager to boost their fortunes.

"I doubt that their board meetings are casual, happy-go-lucky affairs," said researcher Smith, who has covered Russia for six years.