2nd UPDATE: BP Prioritizes Restoration Of US Reputation With New CEO

(Adds CEO comment, background.) By James Herron Of DOW JONES NEWSWIRES LONDON (Dow Jones)--BP PLC (BP) said Tuesday that Robert Dudley, the executive director who heads the company's oil spill response effort in the Gulf of Mexico, will lead the entire company from October 1 when embattled Chief Executive Tony Hayward steps down. "It will be a different company going forward, requiring fresh leadership supported by robust governance and a very engaged board," Chairman Carl-Henric Svanberg said in a statement. In sacrificing Hayward and choosing Dudley, BP's board of directors has made it clear that restoring the company's reputation in the U.S. is its top priority, said analysts. In a conference call with reporters, Hayward acknowledged that he had become, "a lightning rod for public anger," over the spill and it was necessary to have a new face at the top of the company if BP is to move forward in the U.S. "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," Hayward said in a statement. BP is still politically weak in the U.S.--facing investigations into its safety record and a push from Capitol Hill to exclude it from future oil and gas licenses in the U.S. It is vital that BP continue as a viable long-term business in the U.S. Around a quarter of its oil and gas production, and the greater part of its growth ambitions, come from that country. "Hayward became the sacrificial lamb," aimed at preserving BP's status in the U.S., said Oppenheimer analyst Fadel Gheit. The decision to change leadership, "is nothing to do with (Hayward's) business judgment, it's what is politically convenient," he said. "We are highly fortunate to have a successor of the calibre of Bob Dudley who has spent his working life in the oil industry both in the U.S. and overseas and has proved himself a robust operator in the toughest circumstances," said Svanberg. Dudley, who was born in one of the Gulf states affected by the spill, has a reputation as a BP troubleshooter. Until 2008 he ran BP's joint venture with a group of Russian billionaires, TNK-BP, which is Russia's third largest oil company. Given the politically sensitive nature of Russia's oil and gas industry, Dudley was required to be a diplomat as much as an oil man. From 2003 to 2008, he appeared to have mastered this role as TNK-BP avoided many of the troubles faced by other oil companies, notably Royal Dutch Shell PLC (RDSB), and grew to be a major source of both production and reserves for BP. However, Dudley ran into trouble in 2008 as long running tensions between BP and the Russian billionaires over control of the venture boiled over into public acrimony. He was eventually forced to step down and became an executive director at BP. As Dudley looks to reshape BP's U.S. operations, he may benefit from the experience in the early years of his career, when he worked for Amoco Corp. in Chicago. BP took over Amoco a decade ago and a lot of BP's safety problems in the U.S. have been with former Amoco assets, said ING analyst Jason Kenney. "(Dudley) knew Amoco inside out," he said. "BP America needs wholesale change. That might require that the top of the whole division will have to be removed. Dudley has to be a little bit ruthless," said Gheit. -By James Herron, Dow Jones Newswires; +44 (0)20 7842 9317; james.herron@dowjones.com (END) Dow Jones Newswires July 27, 2010 04:35 ET (08:35 GMT)