BP Chairman Carl-Henric Svanberg tried to reassure restless shareholders Thursday that the British oil giant has a strong future despite continued fallout from the Deepwater Horizon disaster.
Svanberg also defended CEO Bob Dudley amid criticism of his handling of a proposed partnership with Russia’s Rosneft.
“Everything we have done since Deepwater Horizon has had one aim; to win back the trust of shareholders and communities the world over,” Svanberg said, according to the prepared text of his speech at BP’s annual general meeting in London. “BP remains a great company, with a great history and, I believe, a great future.”
That Svanberg felt the need to give such a vote of confidence said much about the uncomfortable ground on which he stood Thursday, at the company’s first annual meeting since its deadly Macondo well blowout in the Gulf of Mexico.
The disaster, which killed 11 workers and triggered the worst oil spill in U.S. history, has in the past year sliced nearly 30 percent from BP’s stock price, badly tarnished the company’s image and riled investors. And the upcoming one-year anniversary of the disaster, next Wednesday, has thrust it back into the spotlight.
“I know this has been a difficult year. I know you are disappointed,” Svanberg told one shareholder during a question and answer portion of the meeting, which was webcast by BP. “But I can assure you I will do everything I can to bring a prosperous future for this company.”
Adding pressure to BP in recent weeks has been its failure to close a $16 billion share swap with Russia’s state-owned Rosneft. The deal, which would let BP explore Russia’s oil-rich Arctic, has been held up amid objections by partners in BP’s Russian joint venture TNK-BP.
Thursday had been the deadline for closing the deal, but BP announced that it negotiated an extension until May 16, providing some much-needed breathing room.
Offers and more offers
At the meeting Thursday, Dudley said BP had made multiple proposals to TNK-BP to get it to drop its objection to the Rosneft deal, including offers of cash and participation in the Arctic exploration plans. But none so far has been successful.
The Wall Street Journal reported that some shareholders at the meeting were critical of Dudley for not being able to close the deal, viewed as strategically important to BP at a time when future spill liabilities remain uncertain.
But Svanberg brushed aside the comments, the Journal reported, saying, “The entire board is strongly behind Bob as the CEO.”
Svanberg also defended the company’s move, highly unpopular with shareholders, to suspend BP’s $10??billion annual dividend for 2010’s first three quarters.
He called it “absolutely imperative” to preserve financial flexibility in the face of mounting spill claims. And contrary to rumors, the U.S. government did not force BP to cut the dividend, Svanberg said, adding that the topic did not come up in his meeting with President Barack Obama at the White House during the height of the spill.
The company since has restored the dividend at a lower level than before the disaster.
Protests over spill
The Associated Press reported that environmental groups and others protested outside the meeting about the lingering effects of the Macondo spill, which dumped 4.9 million barrels of oil in the Gulf of Mexico.
After the accident, BP reported a loss of $4.9 billion for 2010 — its first since 1992 – due largely to $40.9 billion in pre-tax charges it set aside for the spill.
Since the spill, the company said, it has reorganized, overhauled management ranks and placed a higher priority on safe operations. It also has announced the sale of more than $30 billion in assets and paid billions in claims to Gulf Coast residents and businesses.
But Svanberg said that while the company has learned many lessons, an undeniable truth remains: “In the business of working with hydrocarbons, there will always be risk.”