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BP favours Rio Tinto’s Skinner as chairman

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By Ed Crooks, Rebecca Bream and Kate Burgess

Published: October 28 2008 02:00 | Last updated: October 28 2008 02:00

Paul Skinner, the chairman of Rio Tinto, has been chosen as the favoured candidate to take over the chairmanship of BP when Peter Sutherland steps down next year.

BP’s nomination committee, headed by Sir Ian Prosser, the deputy chairman and senior independent director, has picked Mr Skinner as its choice for the chairmanship, and he has indicated that he wants the job. His selection has not yet been approved by BP’s full board, and the details of his appointment have yet to be worked out.

Mr Skinner wants to see a resolution to the pursuit of Rio by BHP Billiton, another mining group, before he leaves. BHP has proposed an all-share deal valuing Rio at £40bn.

However, people with knowledge of the process said Mr Skinner was likely to be confirmed as the new BP chairman over the next few months, possibly before the end of the year.

Mr Sutherland has indicated he is prepared to stay on for a few months beyond his planned retirement date of April next year to bridge the gap until Mr Skinner can take over.

He will have been chairman at BP for 12 years, during which time the company has expanded into a global business through a series of ambitious deals, but been battered by problems including the fatal 2005 explosion at the Texas City refinery and the downfall of Lord Browne, its long-serving chief executive.

One leading investor said the list of good candidates for the BP job was “small” and Mr Skinner was one of them. “Therefore if we have to wait for some months to get Paul Skinner, that is OK,” he said.

BP has been seeking a candidate with experience of the oil industry and of running a big multinational, able to deal with governments in both developed and developing countries. There are not many people with those qualifications and several of the rumoured contenders for the job did not come close to meeting the criteria.

Mr Skinner is looking to move on from Rio next year even if the company successfully resists BHP’s bid approach. His contract runs out at the end of 2009, by which time he will have completed six years as chairman.

The move to BP is one of three possible job offers that he is considering, but he has made it clear that BP is his favoured option.

Having been hit hard by the sell-off in the stock market and falling commodity prices, Rio’s shares have fallen well below the value of BHP’s proposed offer.

As a result, Rio’s shareholders are starting to warm to the idea of a takeover by BHP and may put pressure on Mr Skinner to accept the offer, if it is cleared by the European Commission’s competition authorities. A first indication of its view is expected from Brussels next month.

If the deal goes ahead, Mr Skinner could be free to join BP in time for Mr Sutherland to stick to his planned April departure date.

BP will today report results for the third quarter, with analysts on average predicting adjusted post-tax profits of about $6.8bn (£4.3bn), up from $4.3bn in the equivalent period of 2007, but down from $8.6bn in the second quarter.

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