BP boss retreats as stand-in faces spill protest

LONDON/NEW ORLEANS (Reuters) - Beleaguered BP Plc boss Tony Hayward retreated from daily management of the oil spill crisis on Tuesday and dodged a conference appearance where his stand-in was heckled by angry environmentalists.

Hayward's move, after a series of PR gaffes by the CEO and a failure to quickly stem the leak, came ahead of a U.S. court decision over whether to uphold a post-spill ban on deepwater drilling in the Gulf of Mexico.

The ban is being contested by oil drilling companies but has support among environmentalists and in other quarters after more fishing areas were closed on Tuesday in response to the worst spill in U.S. history.

Protesters twice interrupted a speech by BP Chief of Staff Steve Westwell, Hayward's replacement for a speech at the World National Oil Companies Congress in London.

"We need to end the oil age," one young women from environmental group Greenpeace shouted as she was removed by a security guard. Protesters also waved a banner carrying the BP logo splattered with black paint.

The six-month ban by President Barack Obama's government was imposed in response to the explosion on an oil rig in the Gulf of Mexico on April 20 that killed 11 workers and ruptured a well owned by BP, unleashing millions of gallons of crude.

OVERALL CONTROL

Hayward's handling of the crisis has drawn bitter criticism and Westwell said on Wednesday a unit under Bob Dudley, a veteran of BP's activities in Russia, would take charge of its response to the spill. Hayward would retain overall control but would be less hands-on, he said.

Westwell said Hayward was back in London this week "focusing on other activities" while Dudley's team "increasingly will be taking over responsibility for the incident."

U.S. District Court Judge Martin Feldman has promised he will decide by Wednesday whether to temporarily lift the ban while the case is heard. More than a dozen companies involved in offshore drilling operations filed the lawsuit, calling the ban "arbitrary and capricious."

"The government's unchecked authority has shut down this entire industry," said lawyer Carl Rosenblum, representing the oil industry.

The lawsuit is the first seeking to reverse Obama's May 27 moratorium, which companies say will force job cuts in the labor force needed to service offshore oil platforms. The ban has caused the shutdown of 33 deepwater drilling rigs.

At the London conference, Chevron advised against regulation that could hurt the industry. "Leaders and policymakers need to consider the potential for unintended consequences," said Jay Pryor, global vice president for business development.

"Policymakers while rightfully focusing on the tragedy, should analyze it in context, as an isolated and likely preventable event. They should keep in mind that overall the industry has a good safety record and a good record for environmental protection."

The Obama administration argues the moratorium is necessary to prevent further accidents while a presidential commission investigates what caused the BP well to rupture.

The spill has soiled the coasts of four U.S. states, threatening tourism and fishing industries. It has seeped into ecologically sensitive wetlands and put Obama under fire for his handling of the crisis.

LIBYAN BACKING

It has also battered the image of BP, which saw its share price lose 3.6 percent to 337.1 pence at 1000 GMT in London on Tuesday after a 4.5 percent drop in New York.

The loss of investor confidence and prospects of multi-billion dollar clean-up costs has lopped off nearly half of BP's market value since the oil began gushing into the Gulf.

Libya, until recently viewed as a Pariah state by western governments, offered some rare support to BP.

"In a way, while it is a real tragedy, in another way, it is also exaggerated somewhat," Shokri Ghanem, the boss of Libya's National Oil Corporation, told the same London conference. He said BP was welcome to continue drilling in its waters.

The National Oceanic and Atmospheric Administration said on Monday it had expanded the closed fishing area to about 36 percent of the federal waters in the Gulf of Mexico from 33 percent. On the ground, struggling fishermen are reeling from the crisis.

"The oil spill has just shut the charter business down. I've seen some areas that were pristine and are now destroyed," said Bill Heinz, 60, a charter boat fisherman in Boothville, Louisiana, whose business has dried up.

The lawsuit over the ban is another example of the administration's strained relations with big business, which was on display last week when BP bowed to pressure from Obama and agreed to set up a $20 billion oil spill damages fund.

BP is trying to siphon more oil from the blown-out deep-sea well. It said it collected or burned off 23,290 barrels (978,180 gallons/3.7 million liters) of crude on Sunday, well below the 35,000-60,000 barrels a day that government scientists estimate are gushing from the well.

(Writing by Andrew Callus; Editing by David Holmes)