By Houston Business Journal

After weeks of speculation, BP Plc formally announced Tuesday that Tony Hayward will resign as chief executive on Oct. 1 and be replaced by American Robert Dudley.

Hayward took the helm in 2007 but has been harshly criticized as of late for his handling of the Deepwater Horizon explosion, which killed 11 workers, and the subsequent disastrous oil spill in the Gulf of Mexico. Many accused him of acting insensitive to the effects of the tragedy on Gulf residents.

In a statement issued the same day that the British oil giant posted a second-quarter net loss of $17.2 billion, BP chairman Carl-Henric Svanberg noted that Hayward⿿s success in driving BP⿿s performance ⿿was so widely and deservedly admired.⿝

However, he said that BP ⿿will be a different company going forward, requiring fresh leadership supported by robust governance and a very engaged board.⿝

Dudley, 54, is also a BP director is currently in charge of the recently-established unit responsible for Gulf clean-up operations and compensation programs.

He joined BP from Amoco after the merger of the two companies in 1998. He was president and CEO of BP's Russian joint venture, TNK-BP, until 2008.

"I am honored to be given the job of rebuilding BP's strengths and reputation but sad at the circumstances," Dudley said.

Dudley will be based in London and will hand over his present duties in the US to Lamar McKay, chairman and president of BP America.

Hayward will remain on the BP board until Nov. 30. BP also plans to nominate him as a non-executive director of TNK-BP and will pay him about $1.6 million, a year's salary, in lieu of notice.

Commenting on the decision to step down, Hayward said: "The Gulf of Mexico explosion was a terrible tragedy for which - as the man in charge of BP when it happened - I will always feel a deep responsibility, regardless of where blame is ultimately found to lie.⿝

The Houston Business Journal is providing continuous coverage of the Gulf oil spill.

Copyright 2010 American City Business Journals

Copyright 2010