London-based BP PLC's next CEO is likely to be an existing company executive, market analysts said after reports that Bob Dudley is planning to step down from the role by the end of 2020.
While BP Chairman Helge Lund is said to be looking at candidates outside the company as a possible replacement for Dudley, 12 members of BP's senior management team could also be in the running for the CEO position, analysts said.
"Major oil and gas companies have a long-standing history of promoting from within, so there is a very high chance that BP's next CEO will be a current BP executive," Raymond James analyst Pavel Molchanov said in an Oct. 1 email. "Just about any of 12 individuals could be a plausible candidate to succeed Dudley."
The list of BP executives that could replace Dudley is topped by BP CFO Brian Gilvary and BP Upstream Head Executive Bernard Looney, analysts said. Aside from Gilvary and Looney, other potential candidates could include Susan Dio, chairman and president of BP America Inc.; Tufan Erginbilgic, chief executive, downstream; Andy Hopwood, executive vice president, chief operation officer, strategy and region upstream; and Lamar McKay, deputy group chief executive.
"We don't comment on speculation," BP spokeswoman Rita Brown said in an Oct. 1 email.
From 2003 to 2008, Dudley was president and CEO of Russian gas joint venture TNK-BP. In 2009, Dudley was appointed to the BP board and was made director of BP's oil spill response unit in the wake of the 2010 Deepwater Horizon explosion in the Gulf of Mexico that killed 11 people.
Dudley became CEO of BP in October 2010 after his predecessor Tony Hayward resigned amid criticism over his handling of the oil spill. During his nine years as CEO, Dudley has directed the company toward increasing production and rebuilding its U.S. shale business.
BP sold most of its Permian Basin assets in 2010 to help defray the costs of damages related to the oil spill. But in 2018, it bought $10.5 billion of U.S. shale assets from BHP Group, expecting $350 million of annual synergies from the integration of those holdings into its existing shale unit. Through 2020, BP is planning to divest $10 billion in assets to help reduce debt.
Though it could sell some of its more carbon-intensive assets as part of this wider divestment plan — which would help the company reduce its carbon emissions — Dudley said BP is still very committed to its traditional oil businesses. BP will continue to lead the sector in the energy transition toward a lower-carbon world; however, it will also remain competitive on returns as it looks to lower the cash breakeven below $50 per barrel of oil, Dudley said.
In the last few years, many of the oil majors including BP have been hiking equity investments in low carbon fuels and renewables, including wind and solar, as they have come under heavy pressure from investor activists to reduce the carbon intensity of their operations.
In recent years, Dudley's total pay package has also come under fire by shareholders. After a majority of investors clamored against BP's pay policy, Dudley's 2016 remuneration was cut 40% on the year to $11.9 million.
