* Changes to free up CEO to focus on turnaround
* Lamar McKay to head exploration and production divisions
(Adds detail, background)
By Tom Bergin
LONDON, Nov 23 BP is planning to announce
a reorganisation of its oil and gas production operations, three
sources familiar with the matter said, the second significant
restructuring of its main cash generator since the Gulf of
Mexico oil spill.
The latest changes will undo some of the measures Chief
Executive Bob Dudley imposed in 2010 and are partly intended to
free him up from close oversight of day-to-day operations so he
can help chart BP's recovery from the disaster which killed 11
men and spilled 5 million barrels of crude into the sea.
BP's shares have failed to recover since the Macondo well
was capped, as the company struggles to convince investors that
it has a strategy for growth.
Lamar McKay, currently head of BP's U.S. operations, will
become head of a new Exploration and Production (E&P) unit, the
sources said, a reinstatement of a role that was abolished in
2010, in the wake of the oil spill. BP declined to comment.
Dudley broke up BP's old E&P division into three units on
his elevation to CEO to replace Tony Hayward, whose gaffes in
during the spill led to his stepping down.
The creation of functional roles for exploration, drilling
and operating oil and gas production facilities, was aimed at
moving BP away from its traditional decentralised structure of
independent business units.
The decentralised model was blamed by analysts and U.S.
government investigators for giving managers incentives to put
profits before safety.
Dudley has espoused a more centralised model, akin to that
adopted by rival ExxonMobil. The chain of command now runs along
functional lines, whereas in the past managers of individual
fields or refineries had wide rein to run their assets as they
Two sources said Dudley was planning to tweak the structure.
"The pendulum had moved too far away from decentralisation," one
Also, the existing model, which created extra roles
reporting to the CEO, was seen to hinder Dudley's ability to
focus on strategic matters.
"There was a sense that Bob had an awful lot on his plate,"
one source close to the company said.
BP directors agreed on the restructuring some months ago,
one source said, but wanted to delay announcing it until it had
made further progress with the U.S. authorities on settling
investigations around the spill.
The company said last week it would pay $4.5 billion in
penalties and plead guilty to criminal misconduct. A U.S.
government civil investigation could also lead to fines in
excess of $20 billion and two BP engineers face manslaughter
charges relating to the rig blast that led to the spill.
Two sources close to the company said it was also mulling
possible changes to its safety division, whereby some safety
oversight roles functions might be brought back under the
control of the managers of operating units.
The sources said the separate chain of command for safety
personal slowed down operations.
But a BP insider said the standalone safety division,
created in 2010 to signal BP was serious about safety after a
series of disasters, would remain intact.
(Editing by Philippa Fletcher)