Bob Dudley rescued BP from its Deepwater Horizon crisis. His successor may have an even bigger challenge

Bob Dudley, the American chief executive who rescued BP from its Deepwater Horizon disaster, is stepping down.

BP (BP) said Friday that Dudley, 64, would retire at the end of March 2020 after 40 years with the company, including nine as CEO.

Dudley took on the top job at the British oil company in October 2010, just six months after an explosion at its Deepwater Horizon rig in the Gulf of Mexico killed 11 workers and severely damaged marine life. The accident led to the departure of Dudley’s predecessor, Tony Hayward, and triggered a costly nightmare for the company.

It was “probably the most challenging time in BP’s history,” BP chairman Helge Lund said in a statement.

“During his tenure [Dudley] has led the recovery from the Deepwater Horizon accident, rebuilt BP as a stronger, safer company and helped it re-earn its position as one of the leaders of the energy sector,” Lund added.

Regarded as one of the worst oils spills in history, the Deepwater Horizon incident is expected to cost BP nearly $62 billion in litigation and clean-up costs. BP expects to be paying for the damage for another 15 years. Oil from the spill continues to leak into the Gulf of Mexico.

BP’s shares have bounced 60% from a low hit in June 2010, but are still 24% below where they were trading before the disaster.

Like its rivals, BP under Dudley also had to deal with a collapse in oil prices to $26 a barrel in 2014. That forced them to streamline operations — BP alone cut 7,000 jobs by the end of 2017.

But prices have since recovered, and the company bet big on US shale last year, buying major oil assets from mining firm BHP (BBL) for $10.5 billion in what was its first major US investment since Deepwater Horizon. BP profits more than doubled in 2018.

Analysts at Wood Mackenzie said in March that BP had transformed its portfolio and was poised to become the world’s largest international oil company by production. “BP is in the midst of an unprecedented phase of growth,” they said.

New challenge, new CEO

Oil companies are also facing mounting pressure from investors, governments and activists to move into renewable energy to tackle the climate crisis.

Like most of the oil industry, BP still generates virtually all its profit from non-renewable energy sources and has advocated for alternative solutions to achieving emissions targets, such as carbon capture use and storage.

BP invested $500 million in low carbon activities in 2018, according to its annual report. Those investments included FreeWire, a manufacturer of charging systems for electric vehicles. It has rolled out FreeWire technology in the United Kingdom and Europe, and said in August that it had teamed up with ride-hailing giant Didi Chuxing to build a network of charging points across China, the world’s largest market for electric vehicles.

Earlier this year, Climate Action 100+ — a group of 300 investors representing ￡32 trillion ($39.3 trillion) in assets — criticized BP for failing to demonstrate that its strategy was consistent with climate goals.

BP later pledged to link the bonuses of 36,000 employees to greenhouse gas reduction targets.

“As the company charts its course through the energy transition this is a logical time for a change,” said Lund.

Bernard Looney, who joined BP in 1991 and succeeds Dudley,will take on that challenge. Looney, 49, is currently chief executive of BP’s upstream business, which includes its activities in oil and natural gas exploration.

Looney would “thoughtfully lead BP through the transition to a low carbon future,” Dudley said.

Dudley has so far been paid $118.6 million as CEO, BP’s latest annual report shows, excluding his remuneration for this year.