BP announces Hayward’s departure, reports $17 mn quarterly loss

LONDON - Oil giant BP Tuesday announced a record quarterly loss of $17.1 billion as a direct result of the Gulf of Mexico oil spill and said its embattled chief executive, Tony Hayward, would be leaving the company on Oct 1.

The 53-year-old’s departure follows intense criticism of his handling of the catastrophic spill caused by an explosion on the Deepwater Horizon drilling rig in the Gulf of Mexico April 20.

He will be replaced by Robert Dudley, 54, a US citizen and oil industry veteran who was the former chief executive of TNK-BP, the company’s troubled joint venture with Russia.

BP said Hayward, who became chief executive in 2007, would remain on the BP board until the end of November. The company planned to nominate him as a non-executive director of TNK-BP, a joint venture with Russia.

Unconfirmed reports said Hayward, whose handling of the oil spill caused grave tensions with the White House, would be entitled to an annual pension of 600,000 pounds ($930,000) and also receive an annual salary payment of over a million pounds.

According to BP chairman Carl-Henric Svanberg, the decision that Hayward should step down was reached by mutual agreement at a board meeting preceding the publication of the quarterly figures.

The news came as BP announced record losses of $17.1 billion for the period between April and the end of June, described by experts as one of the biggest in British corporate history. They were BPO’s first losses since 1992.

The oil giant said it had taken a $32.2 billion charge for costs relating to the Gulf of Mexico oil spill.

It also announced a shake-up of its portfolio, including up to $30 billion in asset sales over the next 18 months.

The sales would be focused on the upstream business and be selected on the basis “that they are worth more to other companies than to BP”, a statement said.

The company was taking a “prudent approach to managing its balance sheet and its financial liquidity, in order to ensure that BP has the flexibility to meet all its future financial obligations”, it added.

As a result, BP planned to reduce its net debt level to a range of between $10 and 15 billion over the next 18 months, compared to $23 billion at the end of June, said the statement.

However, BP’s quarterly report also warned: “The magnitude and timing of possible obligations in relation to the Gulf of Mexico oil spill are subject to a very high degree of uncertainty.”

Svanberg said BP’s cash flow and underlying performance remained strong. The oil spill was a “tragedy of large consequences” which, he believed the company could overcome.

The stock market in London showed little reaction to BP’s moves. The company’s share price fell by 0.2 percent, to 416 pence.

Hayward was relieved of the day-to-day handling of the enormous response to the oil spill two months into the disaster, after a series of gaffes.

In a statement Tuesday, he indicated that BP’s ultimate blame for the disaster had not yet been established.

“I will always feel a deep responsibility, regardless of where blame is ultimately found to lie,” he said.

Dudley took the lead from Hayward in handling the company’s efforts to contain the oil spill in mid-June.

He is known as a straight-talking executive and has the reputation of a “fixer” at BP, after having led its delicate - and at times turbulent - TNK-BP joint venture.

At a Congressional hearing in Washington last month, US lawmakers charged that Hayward paid no attention to increasing reports of safety problems with the deepwater well.

Hayward’s image was further damaged after photographs of him taking a break to attend yacht races incited outrage among residents of the Gulf coast and prompted criticism from the White House.

BP resumed its efforts to permanently plug the leak Monday, after a four-day halt to its operations brought on by a storm that came through the region.

Even once the flow is stopped, oil could be washing up on US shores for weeks. It took four to six weeks after the initial rupture April 20 for oil to begin reaching the coast.