How Long Will Dudley's Honeymoon Last?

BP Hayward Dudley
BP Hayward Dudley

When BP (BP) named Bob Dudley as the point person overseeing the Gulf oil spill clean-up earlier this month, the press largely hailed the move. It was widely assumed that Dudley, who grew up in Hattiesburg, Mississippi, would understand how to deal with Americans, unlike the U.K.-born CEO Tony Hayward. But while he's clearly off to a great start with the press, Dudley's honeymoon may not last long once he becomes CEO in October. (Dudley is at right in the photo, next to BP Chairman Carl-Henric Svanberg and outgoing Chief Executive Tony Hayward.)

Whether it's a leak from the cap over the Deepwater Horizon rig or problems with the relief wells, the cruel reality of the worst oil spill in U.S. history will likely catch up with the new CEO. To be sure, Dudley has an impressive resume and seems to have the social graces that Hayward lacks, but whether Dudley, the first American to run BP, will ultimately be more successful than Hayward remains to be seen.

"Certainly, people will cut him some slack... [but] he has to produce," says Larry Hrebiniak, associate professor of management at the University of Pennsylvania's Wharton School of Business, in an interview. "People are going to quickly forget he is an American" if things go wrong.

A Big Challenge

Dudley has a tough road ahead. On Tuesday, the oil company reported a record $17.15 billion quarterly loss and set aside $32.2 billion to cover the costs of the clean-up. Over the next 18 months, Dudley's priorities include overseeing the sale of $30 billion in assets to pay for the expenses.

"There's no question that we are going to learn a lot from this ... and I'm sure there will be changes," Dudley told reporters outside BP's headquarters.

Dudley is a veteran oil industry executive who joined BP in 1998 following its $110 billion acquisition of Amoco. In 2003, Dudley was named CEO of TNK-BP, a Russian joint venture, only to flee five years later after dispute with the company's billionaire partners. (Interestingly, Hayward will become non-executive chairman of the same joint venture when he leaves the CEO job). Later, Dudley became managing director of BP for Asia and the Americas. BP's board reportedly passed him over for the CEO's job in favor of Hayward a few years ago.

Dudley was paid $2.2 million last year, which included a bonus of $1.125 million that has raised some eyebrows because it was based on meeting cost targets and involved budgetary cuts that could be linked the current disaster. No word on how Dudley's compensation will be tied to the clean-up.

From Hattiesburg to London

Dudley is as much a good 'ol boy from the Gulf Coast as diva Jennifer Lopez is the "Jenny from the Block" she sang about a few years ago. While the name may have fit years ago, Dudley is now more Burberry than Bubba. He has lived overseas for years, both in London and Moscow. And as CEO, Dudley will be based in the U.K. His clean-up duties will be handed over to Lamar McKay, the chairman and president of BP America, and some analysts believe that the problems may be even costlier than BP expects.

Nonetheless, the press seems to believe that Dudley's American accent will sooth the tempers of angry U.S. government officials and residents of the Gulf Coast. They also point to more practical considerations. About a third of BP's business interests and 40% of its shareholders and employees are in the U.S. And America certainly needs the oil from Gulf to meet its growing demand for energy.

That view, though, is a simplistic one. For one thing, people on the Gulf Coast were not put off by Hayward because he was British. Instead, they were offended by his repeated thoughtless and insensitive remarks, according to Craig Colten, a professor of geography and anthropology at Louisiana State University. Area residents are more worldly than some in the media suggest, in no small part because they need to compete in international markets like everyone else.

Having a Mississippian in charge of BP may sit well with some people in the region, but not all. As Colten points out, there are bitter rivalries among the states in the region, rivalries that were exacerbated by Hurricane Katrina. Residents of Louisiana tell jokes about their neighbors, Colten says.

And Gulf Coast residents, who are in the midst of hurricane season, have more important things to worry about, according to Aaron Viles, a campaign director of the Gulf Restoration Network.

"The oil is still in the Gulf," he says in an interview. Maybe Dudley is more "sensitive" to the concerns of residents but at "the end of the day," sensitivity won't clean up the wost oil spill in U.S. history.