Source: Hayward offered post in Russia

July 27, 2010 at 12:00a.m.

Associated Press

LONDON

Two decades ago, Tony Hayward was a “turtle” — one of a handful of young high-fliers at BP earmarked for great things, named after the cartoon warriors the Teenage Mutant Ninja Turtles.

Fast-tracked through BP’s heavy bureaucracy by the man he would succeed as CEO, John Browne, Hayward took the top job three years ago promising to focus “like a laser” on safety and change the company’s champagne culture. He was supposed to get BP back to basics, and for most of his tenure, shareholders were happy with the results.

Then came the rig explosion that set off the worst offshore oil spill in U.S. history and several weeks in which Hayward repeatedly put his foot in his mouth while his company appeared incapable of stopping the gusher.

Now the former geologist is set to resign. After weeks of speculation about his future, Hayward is to step down from the company’s top job in October and will be offered a post at the company’s TNK-BP joint venture in Russia, a person familiar with the matter said Monday.

The person spoke on condition of anonymity because an official announcement had not been made by the British company’s board, which met Monday in London to decide the 53-year-old Hayward’s fate.

Analysts were divided over whether removing Hayward was justified, but they acknowledged that it was inevitable despite his success before the Gulf spill in streamlining a bloated company.

“He was always going to be thrown out in the end to appease investors,” said David Battersby, investment manager at Redmayne Bentley Stockbrokers.

But a post at BP’s 50-50 joint venture with Russian oligarchs suggests that the company still holds more faith in their embattled CEO than much of the U.S. public and political establishment.

Analysts consider the venture one of BP’s crown jewels, accounting for a quarter of BP production. But it is problematic, as Hayward’s likely successor as CEO, Robert Dudley, well knows.

Dudley was forced to flee Russia in 2008, running the company in absentia until that became untenable, after a row with Russian shareholders. That history means that Hayward, who is still well-regarded in Europe, will be a key negotiator for his new boss.

“It’s recognizing that this is a very smart guy and has good contacts,” said Stephen Pope, the chief global equity strategist at Cantor Fitzgerald. “He will be very good at smoothing the way.”

Phil Weiss, an oil analyst with Argus Research in New York, said BP thinks highly of Hayward, “but they have to get him away from this situation.”

Hayward’s elevation to CEO in 2007 was supposed to herald a new era for the company after a series of accidents — including the 2005 Texas City refinery blast that killed 15 people.

“The task is to restore confidence,” he told the Texas-based Houston Chronicle newspaper shortly after his appointment.

Browne was forced to step down as CEO after admitting perjury while giving evidence to a court to prevent a newspaper revealing details of his private life. There was little surprise that Hayward was named as his replacement.

Not long before he took over, Hayward told a conference that BP needed to change its leadership style because it was “too directive and doesn’t listen sufficiently well.” He said he was concentrating on “closing the performance gap” with rivals such as Royal Dutch Shell.