The Times has learnt that the two men have inched ahead in the competition to succeed Lord Browne of Madingley ahead of the board’s appointment in the new year of a chief operating officer (COO) who will manage the group and eventually step into the chief executive role in 2008, according to BP’s plans.

The field is narrowing as concern mounts that John Manzoni, head of refining and marketing, will become further tarnished by the Texas City fire investigation when the James Baker report on BP’s refinery business is published next month.

BP hopes that Baker will deliver some closure over the fire at the refinery in 2005 but it is expected to be critical of BP, which was accused by the US Chemical Safety Board of adopting a “chequebook” attitude to safety.

BP sources indicate that two further candidates, Andrew Inglis, who is deputy head of exploration, and Iain Conn, an executive director who is head of internal functions, have not been excluded and remain strong contenders but due to their relative youth are not front-runners.

The appointment of a chief operating officer is expected to help the transition, allowing a chief executive-designate to get his feet under the desk while Lord Browne focuses on repairing the company’s bridges in the United States.

The appointment of a COO is expected no later than the spring and before the annual meeting in mid-April. The new job will also signal the beginnings of important changes in the management structure and culture of BP.

The next chief executive is expected to run a flatter organisation with less centralisation of power, say BP insiders.

“It is unlikely that the next chief executive will have as long a term as Lord Browne,” said one insider.

Mr Hayward criticised BP’s management style as “too directive” last week in a talk to his own staff and suggested the top of the organisation did not listen enough. He later said that the comments were self-criticism but BP’s tall pyramid is believed to have left the group too reliant on decisions from head office.

Mr Dudley has emerged late in the race, a reflection of the growing importance of BP’s Russian venture, TNK-BP in the future of the group. For several years, the Russian business has been the main source of BP’s growth and has the most potential, but its future depends on delicate handling of the relationship with the Kremlin.

That relationship is expected to become more difficult when, as is expected, BP’s Russian oligarch partners are bought out by Gazprom or Rosneft.

The competition for Lord Browne’s successor was unofficially launched as far back as 2003 when he put a new generation of executives in top jobs, men who had done their stint as personal assistants to the chief excecutive. He then jokingly referred to them as “turtles” after the Teenage Mutant Ninja Turtles cartoon.

The race to become Lord Browne’s successor was buffeted by the Texas fire and pipeline corrosion in Alaska. It was also muddied last summer when Lord Browne engaged in a public duel with his chairman, Peter Sutherland, over extending his tenure beyond 2008, a fight Lord Browne lost.

In a recent speech, Mr Hayward admitted that management had not been listening to the troops and he confessed to a “leadership style that is probably too directive and doesn’t listen sufficiently well”. But Mr Hayward later insisted the comments were addressed to himself and not Lord Browne.

Shake-up in refining operation

BP’s top refining executive, Mike Hoffman, who led the global manufacturing business, is to be replaced by Cynthia Warner, also an American, in April next year, after almost two years of turmoil in the company’s US refining operations. Mr Hoffman, 49, is to retire. The management shake-up in refining emerges as the company awaits the publication of the results, due next month, of an independent investigation into BP’s US refining operations by James Baker, the former US Secretary of State. The report is expected to be highly critical of the US refining operations. It is likely to focus on the fire at Texas City, which killed 15 people and was blamed by the US Chemical Safety Board on a lax approach to safety.

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