BP promotes veteran upstream boss as No.2 to CEO Dudley

* Lamar McKay, 57, has worked alongside Dudley since Amoco

* BP source says move is not about succession

* BP says McKay to help run company amid oil price storm (Adds details, background)

By Ron Bousso and Dmitry Zhdannikov

LONDON, Feb 1 (Reuters) - BP has promoted Lamar McKay to a newly created role of deputy chief executive, the company said on Monday, adding that the veteran production boss would help the oil major navigate the challenging environment of rock-bottom crude prices.

The elevation of McKay, 57, into the No.2 position at BP, scrapped back in 2003, follows similar patterns at other majors such as Exxon Mobil (Swiss: XOM.SW - news) , where an heir apparent to the chief executive is first promoted to the second-highest ranking job.

But a BP source said the new job for McKay should not be interpreted as a succession plan for CEO Bob Dudley, 60, who has been in charge of the company since 2010.

"This is not about succession. It (Other OTC: ITGL - news) is more short term than that. There is a lot to do right now in this challenging period for the industry," the source said.

Oil prices have fallen 70 percent since mid 2014, reaching their lowest since late 2003 last month.

BP said in a statement: "Lamar's new role will allow us to further concentrate our attention on BP's highest priorities through this challenging time for our whole industry."

Dudley took over at BP soon after the deadly Macondo spill in the U.S (Other OTC: UBGXF - news) . Gulf, which nearly ruined the company and forced it to sell more than $50 billion of assets in order to pay for the fines and clean-up costs, which have exceeded $55 billion.

Last year, BP agreed to pay more than $20 billion in fines to the U.S. government and plaintiffs to resolve nearly all outstanding claims, marking the largest corporate settlement of its kind in U.S. history.

Following the settlement, Dudley has said BP is ready to enter a new era of growth.

McKay's responsibilities in the newly created position will include strategy and long-term planning, safety and operational risk, technology, and corporate governance, including ethics and compliance, the company said.

McKay will be succeeded by Bernard Looney, currently chief operating officer of upstream production, as head of upstream.

BP scrapped the role of deputy chief executive in early 2003 after the departure of Rodney Chase.

The announcement comes a day before BP reports its 2015 fourth-quarter and full-year results, which are expected to show yet another sharp drop in profits as a result of the oil price slide over the past 18 months.

That has led it to slash spending three times and launch a $2.5 billion restructuring programme that will include thousands of job cuts.

Dudley and McKay worked together at Amoco before it was bought by BP at the turn of the millennium. (Reporting by Ron Bousso, editing by Louise Heavens and Jan Harvey)