Friday, June 18, 2010

How BP played BO like a cheap fiddle

Updated with link to Bloomberg story on Dudley's experience in Russia.

Today, British Petroleum called Tony Hayward home to London and replaced him in the day-to-day role of managing the oil spill response with Mississippi-raised Bob Dudley, the Managing Director of BP North America.

This was three days after Barack Obama hauled BP's Chairman of the Board into a closed-door White House meeting for a $20 billion shakedown, and exactly one day after Hayward sat before grandstanding Democrats and heard how his company was responsible for everything except the 2008 mortgage and banking crisis.

The Democrats thought they'd extracted their pound of flesh.  After all, they'd just raked the two top dudes at BP over red hot, election-year coals.  They got a $20 billion promise from the Chairman and quite nearly brought a groveling, apologetic CEO to tears.  What does BP do?

Brings in a real "big gun."  Bob Dudley is no man to be trifled with.  He had previously led a joint venture with Russia and while doing so, grew hydrocarbon production by 26 percent, replaced proven crude reserves at an annual average rate of 138 percent and increased earnings nearly five-fold.  His unit also had the lowest average exploration cost  of any Russian oil companies and provided the highest shareholder return of any major Russian oil company.

He did this by playing hardball with...  Vladimir Putin.

Dudley had to survive near constant raids by Putin's secret thug army,  "defeated" bureaucratic red tape that kept his employees from getting construction permits and outlasted a Putin sponsored no-confidence vote of the joint venture's board.  He was eventually forced out of the country, but not before BP had made billions of dollars and locked up reserves for decades to come.  Part of Dudley's success is why, when the Obama regime demanded a $20 slush fund to compensate victims of the spill, Chairman Carl-Henric Svanberg didn't blink.  Drop in the bucket, champ.  Let me introduce you to Bob Dudley...

In American Spectator today, Daniel Oliver laid out a powerful case for Obama as a President who is in way over his head.  Oliver calls it being in a "square box."  In business, being in "the box" means you are working within a well defined set of limits to one's experience and capabilities.  You have no solutions to the problem before you because your life experience has never presented you with a set of challenges even remotely similar.  Failure is inevitable, because your imagination is limited by your experience, capability and education.

Svanberg has shrewdly shrunken the box by replacing Hayward with Dudley.  Hayward is a British gentleman.  Dudley is a bare-knuckles brawler who beat Vladimir Putin on Putin's own turf.  BP is playing Obama like a cheap fiddle.  The company knows he's in way over his head, and they just hired the man who's more likely than not to break the ankle holding the boot on BP's throat.

Extra point:  Tony Hayward took all the Waxman - Stupak hate back to London with him.  Dudley didn't get the grill job, and that really has to chap their collective ass.