Tony Hayward, who became CEO of BP plc in May, on Thursday unveiled a reorganization plan that will reduce the number of business units to two from three and create an alternative energy division.

BP will be defined by two business segments under the plan: Exploration and Production (E&P) and Refining and Marketing. A Gas, Power and Renewables division will be split between these two entities. Alternative Energy, a new, separate division, will handle BP’s low-carbon business and future growth options outside oil and gas, Hayward said.

BP said it wanted to simplify its management with resources “increasingly shifted to the front line with operating managers freed from corporate bureaucracy and the burden of unnecessary overheads.” Hayward said that “BP’s performance has materially lagged our peer group in the last three years. It has been poor because we are not consistent and our organization has grown to o complex.”

In September Hayward was reportedly considering a postponement of some of BP’s offshore projects to concentrate on completing its long-delayed Thunder Horse and Atlantis subsea structures in the Gulf of Mexico, where BP is the biggest leaseholder (see Daily GPI, Sept. 14).

“Redundancies” would be inevitable in some parts of the company, but Hayward said BP’s front-line operations would continue to be strengthened. BP did not disclose any costs or staff cut numbers in its statement.

Hayward said he did not expect BP to sell any major assets, but he did not rule out some property sales.

Hayward, who had headed the E&P unit before becoming CEO, appointed Andy Inglis earlier this year to run that department. Iain Conn took charge of BP’s refining and marketing in May, replacing John Manzoni who resigned to become CEO of Calgary-based Talisman Inc. Vivienne Cox, who has headed the Gas, Power and Renewables unit, will head the smaller Alternative Energy unit.

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