While BP is not involved in shale gas exploration in the UK, Mr Dudley said that “doesn’t mean we won’t be in the future”. The area around Blackpool where Cuadrilla has been exploring had “great potential”, he said.
Mr Dudley was speaking at the oil major’s annual general meeting, where it faced mini-revolts over its pay and over Carl-Henric Svanberg’s position as chairman. Nearly 7pc of investors declined to support the remuneration policy while 9pc failed to back Mr Svanberg.
BP’s board also fielded criticism over the Gulf of Mexico disaster and the efficacy of its $8bn (£5.2bn) share buyback, which it is funding using proceeds from the $27bn sale of its stake in Russian joint venture TNK-BP.
Quizzed by shareholders on shale gas, Mr Dudley said: “When used responsibly and carefully, we think this could potentially provide great economic benefits for the UK, where natural gas prices are quite high - probably three or four times higher than they are in the United States.”
BP has previously said that shale gas is unlikely to be a “game-changer” for the UK over the next two decades. Iain Conn, a BP executive director, repeated a note of caution on Thursday, telling the Daily Telegraph the US enjoyed a series of advantages over the UK, having a large fleet of drilling rigs, established pipeline infrastructure and a mineral rights regime conducive to exploration. These meant shale development in Britain would “take a longer time-frame”.
Mr Dudley, meanwhile, was also enthusiastic about the “massive” prospects for shale oil in Russia, where BP has taken a 20pc stake in oil giant Rosneft as part of the deal to sell its 50pc stake in TNK-BP. “It may very well be there is even more in Russia than we think,” he said.
BP has begun an $8bn share buyback using some of the cash proceeds of the deal but faced questions from shareholders over whether the process would do anything to boost its “floundering” share price, which has barely moved since the buyback began and remains well below the levels it enjoyed before the Gulf disaster.
Mr Svanberg said he thought “anybody will agree” that if a company were, for example, to buy back 10pc of shares the share price would move 10pc higher.
Mr Dudley was also defensive of the programme, telling reporters: “I think a lot of people don’t understand what a buyback is. We have only just started that programme.” While BP’s share price had not “necessarily moved that much versus the FTSE and other oil companies” since the start of the buyback, it was “starting to differentiate itself a bit”, he said. “The impact of the buyback programme will only happen over time.”
BP received a mixed bag of views over the legacy of the Gulf of Mexico disaster. Some Gulf Coast residents at the meeting accused it of failing to tackle health and environmental problems caused by the disaster, which killed 11 men and caused the worst offshore spill in US history.
But some shareholders expressed alarm at the “excessive” lawsuits against BP, which is on trial facing claims of tens of billions of dollars. One longstanding shareholder was applauded for saying BP faced a “frenzy of suing of unjustified claims”. “This is a great corporation which is being screwed by unscrupulous lawyers,” he said.
Mr Svanberg said BP was defending itself “robustly”, adding that the ongoing trial meant that “while all your worries are on everybody’s mind we cannot say much more”.
Mr Dudley spoke of the “political risk” BP faced in the US, and made a point of praising the UK government’s handling of the Piper Alpha disaster, which killed 167 men in the North Sea in 1988. The disaster led to an overhaul of the UK safety regime but did not result in major penalties for the operator. “The maturity of which way the UK government worked with industry is a model,” he said. “I wish the rest of the world would look at that when there are industrial accidents.”
On pay, Guy Jubb, head of governance at Standard Life Investments, told the AGM: “We are concerned that the executives have the potential to receive significant awards for achieving unchallenging performance targets.”
BP said it had the highest level of shareholder support for its pay policy for seven years.
Mr Svanberg shrugged off dissent over his position, saying support for him was “improving with a couple of percent every year”.