BP Announces Restructuring to “Rebuild Trust” After Oil Spill

In the wake of the Gulf of Mexico oil spill, BP has announced a major management shake-up. Among the changes announced yesterday is the removal of Andy Inglis from his position as Head of Drilling. Much of the fault for the oil spill has fallen on BP’s drilling team.

The April 20 explosion aboard The Deepwater Horizon oil rig spawned what now ranks as the worst oil spill in US history. In addition to killing 11 men aboard the rig, the explosion caused more than 4 million barrels of oil to spew into the Gulf of Mexico until the well was finally contained on July 15.

BP had already announced the departure of CEO Tony Hayward in July, effective October 1. He will be replaced by American Bob Dudley, who has been overseeing BP’s spill response. In announcing the restructuring, BP said it was designed to improve safety and rebuild confidence in the company after the disaster.

“These are the first and most urgent steps in a program I am putting in place to rebuild trust in BP,” Dudley said in a statement. “That trust is vital to the restoration of shareholder value which has been so adversely affected by recent events.”

According to a report in The Wall Street Journal, a BP spokesperson said the restructuring will give Dudley a more direct and detailed view of safety and operations in the company’s upstream division than his predecessors had. The Exploration and Production division, formerly headed by Inglis, will be split into three divisions – Exploration, Development, and Production. The three executives running those divisions will report directly to Dudley, the Journal said.

The restructuring will create a new Safety and Operational Risk division, with staff assigned to every business unit who will have the power to intervene if safety standards are breached, the company said in a statement. The staff assigned to monitor safety will report through their own shorter chain of command, rather than through existing business lines where other operational concerns in addition to safety are a factor, the spokesperson said. No word yet, though, on the number of safety staff nor where they will be assigned, the Journal said.

BP will also conduct two reviews into some of the fundamental ways it does business that have been linked to the Deepwater Horizon disaster. The company will examine how it manages relationships with third-party contractors, and it will review how its business incentives affect safety and risk management, the Journal said.

This is not the first time a disaster has caused a major restructuring at BP. It did so after a fatal 2005 accident at its Texas City refinery. And in 2007, then-incoming CEO Hayward promised to focus “like a laser” on safety.

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