BP to outline upstream growth strategy

By Andrew Callus LONDON, Dec 2(Reuters) - BP will outline growth plans for its oil and gas production arm on Monday in its first strategy update since striking a series of deals aimed at getting its Russian and U.S. operations back on track. Like all top investor-owned western oil firms, BP is struggling to increase output and reserves in an era when nations guard their resource wealth jealously, and spending ever more billions of dollars to find new supplies and develop them. The United States and Russia contribute about half the company's output. In the United States, and particularly the Gulf of Mexico, the UK-based industry No. 4 by value became a pariah after its 2010 oil spill there. Although BP's U.S. offshore operations are back to pre-spill levels, last month it pleaded guilty to criminal misconduct and added a $4.5 billion penalty to the $23 billion the disaster has cost it. Investors expect the settlement will allow the company to move on, but last week the U.S. government used BP's criminal status to ban it from new federal contracts over its "lack of business integrity." Also last week, BP avoided bidding for Gulf of Mexico leases, raising a new question mark over its plans for a province where it is the main deepwater leaseholder, and which accounted for much of its output growth plans in past strategy announcements. In Russia, where BP is more heavily invested than rivals, BP has had disagreements with its 50-50 partners in TNK-BP , privately-owned AAR. BP has also pursued new Russian projects with the increasingly dominant state sector in the form of deals with government-owned Rosneft. In October and November, it finally struck a series of deals that allows it to exit TNK-BP, acquire a stake in Rosneft, and begin talks about such projects. Monday's strategy update comes hard on the heels of a Nov. 23 reorganisation of its oil and gas production management, reversing a change it enacted after the spill. The move puts Lamar McKay, currently head of BP's U.S. operations, in charge of the upstream division, freeing up Chief Executive Bob Dudley from close oversight of the day-to-day operations he took over in the wake of the spill, which killed 11 men and spewed millions of barrels of crude into the sea. McKay, like Dudley, is a former executive from Amoco, the company BP took over in 1997 to join the top tier of the industry.