Bob Dudley

Bob Dudley
Born	Robert Warren Dudley 1955-09-14September 14, 1955 (age 70) Queens, New York, U.S.
Nationality	American
Education	Hinsdale Central High School University of Illinois (B.S., chemical engineering) Thunderbird School of Global Management (M.I.M.) Southern Methodist University (M.B.A.)
Alma mater	University of Illinois
Occupation	Business executive
Years active	1979-present
Employer	Amoco (1979-1998) BP (1998-2020)
Title	Group chief executive, BP plc
Term	2010-2020
Predecessor	Tony Hayward
Successor	Bernard Looney
Known for	Group chief executive of BP Leading BP's recovery from the Deepwater Horizon oil spill Chief executive of TNK-BP
Spouse	Mary Dudley
Children	2

Robert Warren Dudley (born September 14, 1955), known as Bob Dudley, is an American business executive who served as group chief executive of BP from October 2010 to March 2020. He was the first American to lead the company in its history, and he took the role five months after the Deepwater Horizon disaster, at a point when BP faced potential liabilities large enough to threaten its survival as an independent company.

Dudley spent his entire career in the oil industry, joining Amoco in 1979 and continuing with BP after the two companies merged in 1998. From 2003 to 2008 he was president and chief executive of TNK-BP, the Anglo-Russian joint venture that at its peak produced around a fifth of BP's oil output, until a dispute with BP's Russian partners forced him to leave the country when his visa was not renewed.

As group chief executive he oversaw the settlement of the Deepwater Horizon litigation, which ultimately cost BP more than $60 billion, funded through the largest divestment programme ever undertaken by an oil major. He sold BP's stake in TNK-BP to the Russian state company Rosneft in 2013, restored the dividend, and returned BP to growth in the second half of the decade. His compensation attracted a shareholder revolt in 2016, when 59 percent of votes cast opposed his pay package for a year in which the company recorded a substantial loss.

Early life and education

Bob Dudley was born in Queens, New York, on September 14, 1955. He grew up in Hattiesburg, Mississippi, and later moved with his family to the Chicago suburbs, graduating from Hinsdale Central High School in 1973. The Mississippi years gave him a personal connection to the Gulf Coast that BP emphasised heavily when he was appointed to lead the company's response to the 2010 spill.

He studied chemical engineering at the University of Illinois, where he was a member of the Phi Kappa Psi fraternity and served as its District 3 Archon. He then took a master of international management degree at the Thunderbird School of Global Management, later part of Arizona State University, and subsequently a Master of Business Administration at Southern Methodist University in Dallas.

The combination of a technical undergraduate degree with two graduate qualifications in international business was well suited to a career that would be spent largely on cross-border negotiation rather than on engineering.

Career

Amoco, 1979-1998

Dudley joined Amoco in 1979 and spent nearly two decades with the company. He held a range of positions, including negotiating exploration and production agreements in the South China Sea.

Between 1994 and 1997 he was posted to Moscow, arriving in the period immediately after the collapse of the Soviet Union when Western oil companies were attempting to establish positions in the newly privatised Russian energy sector. The assignment gave him early exposure to Russian commercial and political conditions and shaped the rest of his career.

He became a general manager for strategy at Amoco. When BP acquired Amoco in 1998 in what was then the largest industrial merger ever completed, Dudley took a comparable strategy role at the combined company.

TNK-BP, 2003-2008

Formation of the joint venture

In 2003 BP entered a partnership with a consortium of Russian investors known as AAR, comprising Alfa Group, Access Industries and Renova, whose principals included Mikhail Fridman, Viktor Vekselberg and Len Blavatnik. BP contributed approximately $6 billion, then about £3.6 billion, in what was at the time the largest foreign investment in Russia. The resulting company, TNK-BP, was owned equally by BP and AAR.

Dudley was appointed president and chief executive. Under his leadership the venture increased oil production by roughly a third, to about 1.6 million barrels per day, and it became a substantial contributor to BP's group reserves and earnings.

Breakdown and departure

The equal shareholding structure gave neither side control, and the relationship deteriorated. AAR accused Dudley of running the venture in BP's interest rather than in the joint venture's, objecting in particular to the number of BP secondees in senior positions and to the strategy for international expansion.

The dispute escalated through 2008 into a sustained campaign of administrative pressure. BP technical staff were barred from working in Russia after difficulties with work permits. Tax and labour inspections multiplied. In June 2008 Dudley left Russia at short notice when his own visa was not renewed, saying at the time that he had faced "sustained harassment" from the Russian authorities.

He attempted for five months to run TNK-BP from an undisclosed location outside the country before resigning in December 2008. United States diplomatic cables later released by WikiLeaks recorded that Dudley suspected Igor Sechin, then Russia's deputy prime minister and later chairman of the state oil company Rosneft, of organising a boardroom campaign against him, and that he had come to fear for his safety.

The episode gave Dudley an unusual reputation within BP as an executive who had been through a serious confrontation with a state and survived it professionally.

Return to BP

On April 6, 2009, Dudley became a managing director of BP with oversight of the company's activities in the Americas and Asia, a position that placed him on the group's most senior management committee and made him a plausible successor to the chief executive Tony Hayward.

Deepwater Horizon

The disaster

On April 20, 2010, the Deepwater Horizon drilling rig, operating on BP's Macondo prospect in the Gulf of Mexico, suffered a blowout and explosion that killed eleven workers. The well flowed for 87 days before it was capped, discharging an estimated 4.9 million barrels of oil and producing the largest marine oil spill in history. Five United States states were affected.

BP's initial handling of the crisis, and in particular a series of public remarks by Hayward, damaged the company's standing with the American public and government to the point where its ability to operate in the United States was in question. The share price fell by more than half, the company suspended its dividend, and there was open speculation that BP would be forced into bankruptcy or acquired.

Gulf Coast Restoration Organization

On June 18, 2010, Dudley was assigned to take charge of BP's response, and on June 23 he was formally appointed president and chief executive officer of the newly created Gulf Coast Restoration Organization.

The role encompassed the clean-up operation, coordination with federal and state authorities, public communication about BP's activities, and assessment of the damage. Dudley's American nationality and his Mississippi upbringing were central to the appointment. BP had concluded that its response needed to be led by someone who could speak to Gulf Coast residents and to Washington without the barrier that had opened between Hayward and both audiences.

Appointment as group chief executive

On July 27, 2010, BP announced that Dudley would succeed Hayward as group chief executive with effect from October 1, 2010, and that he would join the board of directors. He became the first American to lead BP.

Group chief executive, 2010-2020

Settling the liabilities

The central task of Dudley's first five years was resolving the Deepwater Horizon litigation on terms the company could survive.

In November 2012 BP agreed to plead guilty to eleven counts of felony manslaughter, one count of felony obstruction of Congress, and violations of the Clean Water Act and the Migratory Bird Treaty Act, and to pay $4.5 billion, then the largest criminal penalty in United States history.

In July 2015 BP reached agreement in principle with the federal government and five Gulf states, finalised in October, to settle the remaining civil claims. The global resolution was valued at $20.8 billion, the largest settlement with a single entity in the history of the United States Department of Justice, comprising $5.5 billion in Clean Water Act penalties, $8.1 billion in natural resource damages, and up to $700 million held against damage not yet identified, with payments spread over eighteen years.

The total cost of the disaster to BP, including clean-up, compensation, penalties and legal expenses, is generally estimated at more than $60 billion, and by some accounts close to $65 billion.

Divestment programme

To fund the liabilities, Dudley carried out a divestment programme without precedent in the industry, selling more than $75 billion of assets over the course of his tenure. BP disposed of refineries, pipelines, upstream fields and its share of the Alaska pipeline network, among many other holdings.

The consequence was a substantially smaller company. BP's production and reserves fell materially, and the group emerged from the process with a portfolio concentrated on fewer, higher-quality assets. Dudley characterised the outcome as a deliberate trade of scale for resilience, and the strategy became known within the company as "value over volume."

Exit from TNK-BP and the Rosneft stake

In 2012 and 2013 Dudley resolved BP's remaining Russian position, the venture he had personally run. BP sold its 50 percent shareholding in TNK-BP to Rosneft in a transaction valued at approximately $27.5 billion, receiving about $12.3 billion in cash and a shareholding of roughly 18.5 percent in Rosneft, which took BP's total holding in the Russian state company to just under 20 percent.

The deal converted a contentious operating joint venture into a passive minority stake that produced dividends and a share of Rosneft's reserves without requiring BP to manage Russian operations directly. In March 2013 Dudley was offered and accepted a seat on the Rosneft board, alongside the executives with whom he had been in conflict five years earlier.

The Rosneft holding became a liability after the annexation of Crimea in 2014 and the sanctions that followed, and it was written off entirely after the full-scale invasion of Ukraine. Dudley left the Rosneft board in February 2022.

Financial recovery and the dividend

Dudley suspended and then restored BP's dividend, a payment on which a significant portion of United Kingdom pension income depends and whose cancellation in 2010 had been among the most politically sensitive consequences of the spill.

The recovery was complicated by the collapse in oil prices from mid-2014, which took Brent crude from above $110 a barrel to below $30 by early 2016. BP recorded a loss of $6.5 billion for 2015. Dudley responded with further cost reduction, reducing the company's organic cash balance point, the oil price at which operations and dividends are self-funding, from around $60 a barrel to the mid-$40s.

By the end of his tenure BP had returned to growth, with production rising and the balance sheet substantially repaired. Daniel Yergin, the energy historian and vice chairman of IHS Markit, said that Dudley "took over a BP that was in deep crisis and built it back into a resurgent global player, restoring confidence outside the company, including with investors, and most crucially among BP's own employees."

Climate and the Oil and Gas Climate Initiative

Dudley chaired the Oil and Gas Climate Initiative, an industry-led body formed in 2014 in which major international and national oil companies coordinate work on emissions reduction, methane control and carbon capture. BP under Dudley acknowledged the reality of human-caused climate change and supported carbon pricing, while continuing to argue that oil and gas would remain necessary for decades and resisting calls to set absolute emissions targets covering the use of its products.

Critics, including climate campaigners and some institutional investors, regarded the position as insufficient. The company's more far-reaching net zero commitment came under his successor.

Retirement

BP announced on October 4, 2019, that Dudley would retire, and he stepped down at the end of March 2020 after forty years in the industry and nine and a half years as chief executive. The chairman Helge Lund described it as a "logical time for a change," with BP entering a period of energy transition.

He was succeeded by Bernard Looney, previously head of the company's upstream business.

Controversies

Executive compensation

Dudley's pay produced one of the most significant shareholder revolts in British corporate history. At BP's annual general meeting on April 14, 2016, 59 percent of votes cast opposed the remuneration report, which awarded Dudley a package worth $19.6 million for 2015, a year in which BP had recorded a loss of $6.5 billion, cut thousands of jobs and seen its share price fall.

The vote was advisory rather than binding, but its scale forced a response. In April 2017 BP disclosed that Dudley's package for 2016 had been cut by approximately 40 percent, or about $8 million, to $11.6 million, and the company revised its remuneration policy to reduce the maximum awards available under its long-term incentive plan.

The episode contributed to a wider debate in the United Kingdom about the alignment of executive reward with company performance, and it was cited in subsequent government consultations on corporate governance.

The Russian relationship

BP's near 20 percent shareholding in Rosneft, and Dudley's own seat on the Rosneft board, drew sustained criticism. The position placed a major British-listed company in partnership with a Russian state enterprise whose chairman was subject to United States sanctions from 2014, and it left BP with a large exposure that could not readily be sold.

Defenders of the arrangement noted that it had resolved an unmanageable joint venture on favourable financial terms and that the alternative, remaining in TNK-BP, carried greater operational risk. Critics argued that BP had traded operational risk for political risk and had accepted a dependency that would eventually have to be written off, which is what occurred in 2022 at a cost of about $25 billion.

Safety record

Dudley inherited responsibility for a company whose safety record had been questioned well before Deepwater Horizon, following the 2005 Texas City refinery explosion that killed fifteen workers and the 2006 Prudhoe Bay pipeline leaks in Alaska. He introduced a centralised safety and operational risk function with authority independent of the operating businesses, a structural change intended to prevent commercial pressure from overriding technical judgment.

Assessments of the result vary. BP's recorded process safety indicators improved over the decade, though critics continued to argue that structural incentives in deepwater drilling remain difficult to manage.

Later career

In July 2021 Dudley became chairman of Axio Global, a cyber risk management software company, and joined a consortium of investors in the company's $23 million Series B financing round, which was led by ISTARI, a venture backed by the Singapore state investor Temasek.

In August 2022 he joined the board of 8 Rivers Capital, a company developing carbon capture and low-carbon energy technologies.

He has continued to chair the Oil and Gas Climate Initiative.

Personal life

Dudley is married to Mary Dudley. They have two children. He has been a donor to the British Conservative Party.

He is known within the industry for a reserved public manner, in deliberate contrast to the style of his predecessor, and for having conducted the Deepwater Horizon settlements largely out of public view.

External links

• BP plc official website
• Oil and Gas Climate Initiative