UPDATE 2-Imperial Oil names Exxon veteran Kruger as CEO
* Richard Kruger to replace Bruce March next month
* March named senior VP at ExxonMobil Chemical Co
* Shuffle comes after oil sands budget woes
* Shares drop 1.8 pct
CALGARY, Alberta, Feb 21 (Reuters) - Imperial Oil Ltd , Canada's No. 2 oil producer and refiner, on Thursday named Exxon Mobil Corp executive Richard Kruger to replace chief executive, Bruce March, as the company readies the start-up of its C$12.9 billion ($12.7 billion) Kearl oil sands mine.
March, who ran the company for five years, will become senior vice-president at Exxon's chemical unit. Kruger, currently president of ExxonMobil Production Co, will take over at the Canadian company on March 1. Exxon has a 69.6 percent stake in Imperial.
March laid the groundwork for a big expansion of Imperial's oil production as he completed construction of the Kearl project, which is expected to begin producing before the end of the first quarter.
However the project was plagued by cost overruns that pushed the budget two-thirds above Imperial's original C$7.9 billion estimate.
A final, C$2 billion, overrun announced earlier this month was blamed on bitter northern Alberta winter temperatures and a series of court challenges in the U.S. Pacific Northwest that delayed the transport of foreign-made processing modules to the site, forcing a change in construction schedules and increasing costs.
"We wonder whether Mr. March's departure from Imperial Oil is related to the cost overruns at Kearl," Michael Dunn, an analyst with FirstEnergy Capital, wrote in a research note.
March also oversaw a push into unconventional natural gas that began when Imperial moved into the Horn River shale gas field in northeastern British Columbia and will expand further when the company and Exxon Mobil complete the C$2.6 billion purchase of Celtic Exploration Ltd that was approved by the Canadian government on Wednesday.
Kruger started his career with Exxon in 1981 and has held positions in Russia, Africa and Malaysia.
Shares of the company were down 79 Canadian cents to C$42.03 by late morning on the Toronto Stock Exchange.