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When Bob Dudley became BP’S chief executive in 2010 he faced a political and public backlash in the US after the deadly Gulf of Mexico blowout. He had to bring the energy major back from the brink of collapse and secure its societal licence to operate.
Nearly a decade on, as he hands over a revived company to Bernard Looney, BP’S long-term survival is once again under scrutiny amid pressure to act on climate change — a challenge that the entire oil and gas industry is grappling with.
“Bob steered BP through a difficult time that is unprecedented in the last 30 years. The situation BP faced was unique to the company,” said Jason Gammel, energy analyst at Jefferies. “Now Bernard faces a set of choices that all of its peers also have.”
After managing the Deepwater Horizon disaster, the fractious break-up of the TNK-BP joint venture in Russia and the oil price crash of 2014, Mr Dudley focused on the “dual challenge” of providing the world with more energy while dramatically reducing emissions.
However, it is his successor who must spell out what this means for BP’S corporate strategy.
The pressure is mounting. Shareholders are demanding BP take greater action on climate change, Greenpeace activists this year scaled one of its North Sea oil rigs and shut down its London headquarters. BP’S funding of the arts is also under scrutiny.
Yet most investors are still enticed by the dividends BP generates. And while oil companies are becoming social pariahs in Europe, in Africa and Asia, where demand for hydrocarbons is accelerating, they are still embraced.
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Mr Looney, a 49-year-old Irishman with a reputation as a strategic thinker, will need to decide which direction to take the energy major as it prepares its next five-year strategy beginning in 2021.
Since claims from the Gulf of Mexico disaster have fallen, BP has a more robust balance sheet and has weighed cash generated from its businesses and divestment proceeds with capital spending, dividends and buybacks. Mr Looney has helped deliver higher production and running projects more efficiently.
BP reported earnings of $12.7bn in 2018, as high as when oil was trading closer to $100 a barrel, compared with $6.2bn in 2017.
BP has invested in wind farms, solar power, biofuels and lowcarbon start-ups but returns from these businesses do not match its core oil-drilling division.
“Does BP stay as Big Oil or does it become Big Energy — diversifying into power and renewables in a meaningful way. It feels like BP right now is on the fence,” said Ed Crooks at consultancy Wood Mackenzie.
Mr Looney, a BP lifer, was formally selected at a board meeting on Thursday triumphing over chief financial officer Brian Gilvary. External candidates were considered, but Mr Looney had long been tipped for the post.
Since 2016 he has headed BP’S exploration and production business after operational roles around the world. Identified early on as a rising star, he was made an executive assistant, or “turtle”, to John Browne when he was chief executive, named after the Teenage Mutant Ninja Turtles who were on hand whenever help was needed. He also worked under Tony Hayward.
