If Bob Dudley, an American, becomes the next chief executive of the UK's biggest oil company as many expect, it could be legitimate to ask whether his former company Amoco has taken over BP.
Large corporate mergers often involve a struggle for supremacy between disparate cultures. In 1998, when BP acquired the much talked about US oil company Amoco, it was widely assumed the British oil giant's culture would win out.
But now the US public is baying for change, egged on by a chorus of vote-conscious politicians. BP's "corporate culture of carelessness", they argue, has spawned the biggest oil spill in US history.
The point man who could be entrusted with cultural reform, starting as early today, is the Amoco alumnus Mr Dudley.
"It's a wise choice to pick an American. This will take off some of the pressure," Gudmund Halle Isfeldt, an analyst at DnB NOR in Oslo, told Bloomberg. He anticipated BP's board would name Mr Dudley the future chief executive of the company after it met yesterday evening.
Born in Queens, New York, in 1955, while his father was serving a stint in the US Navy, the current head of BP's oil-spill response was raised in Hattiesburg, Mississippi, and spent summers in Biloxi, on the Gulf coast. He obtained a chemical engineering degree from the University of Illinois and business degrees from Southern Methodist University in Dallas, Texas, and the Thunderbird School of Global Management in Glendale, Arizona - training grounds for the "good ol' boys" who dominated the Gulf Coast oil scene around that time.
Mr Dudley got his start in the oil industry as a field engineer for Amoco in Texas and later worked for the company in Scotland, Russia and China. He joined BP through its takeover of the Chicago-based Amoco and was soon made head of the merged company's renewable and solar energy business.
At BP, he was the chief executive of the company's TNK-BP joint venture with Russian billionaire investors. There, in Vladimir Putin's Russia, he was embroiled in a fight with business partners who wanted to focus exclusively on the bottom line. Mr Dudley stood up for BP and was chased out of Russia. After running TNK-BP from a secret hideout while a shareholder battle for the company raged, his resignation was the public sacrifice the Russians demanded for a settlement.
Mr Dudley has been described as diplomatic and careful with words.
On May 6, he told a business audience in Boston, less than three weeks after the explosion on the Deep Horizon oil platform, "the human dimension of this tragedy" had been "somewhat overlooked".
"Our thoughts and prayers are with the injured and with the families and friends of those souls who are not with us today. We feel an enormous sense of sadness and loss. ? No one will rest until this job is done," he added.
Still, not everyone would welcome his elevation.
"I worked for BP between 2000 and 2004 and one thing that was very noticeable was that in the UK and in Europe, BP was obsessed with health and safety, environmental protection, risk minimisation, etcetera," Stan Pomeray, a UK investor, wrote two weeks ago on the Interactive Investor website. "We regularly turned down lucrative bits of business because it felt too risky.
"In the US, however, BP was a completely different animal," he added. "Nobody took safety seriously, nobody really gave a damn about environmental considerations. ? That wasn't just senior management it was everyone. The reason? Simple: BP USA was basically Amoco re-badged."
tcarlisle@thenational.ae
Prophets of Rage
(Fantasy Records)
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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