Posted on 27-10-2004

$2.7m An Hour Profit For BP

October 26, 2004, The Guardian
 
Oil giant BP today posted record profits of $3.94bn (£2.14bn) after fuel
prices hit new highs.
 
The third quarter performance of Britain's biggest listed company came as
oil prices rose to an average of almost $50 a barrel.
 
Because of the importance of refining and marketing, high oil prices do
not always guarantee BP huge profits. Today the firm thanked "strong
global demand" for refinery products such as petrol and diesel. Marketing
profits were also up.
 
BP said the loss of production in the United States following Hurricane
Ivan, low inventories and limited spare capacity had underpinned the
rising price of crude oil.
 
The profits figure for the period between July and September - which
amounts to around £1m an hour - includes exceptional costs of $401m,
linked to environmental clean-up and other charges.
 
BP said profits in the first nine months of the year were 26% higher than
a year ago at $34bn.
 
The firm's chief executive, Lord Browne, warned that the highs were not
likely to go on indefinitely with signs of slowdown in Asia and sluggish
economies in Europe.
 
However he said: "This has been another strong performance against the
backdrop of strong global demand."
 
There was a 30% improvement in profits from exploration and production as
BP reaped further benefits from its links with Russian oil group TNK.
 
Refining margins slipped back from record levels in the second quarter but
remained high due to strong growth in demand and low stocks, BP said.
 
Lord Browne said the group was on track to hit its investment targets and
use spare cash to buy back more of its own shares.
 
Economic recovery in the United States appeared to have gathered speed in
the third quarter, but Europe was failing to keep pace, he said. "The
outlook for the rest of 2004 will depend upon the rate of US production
recovery after Hurricane Ivan and the strength of oil demand growth," Lord
Browne said.
 
Political stability in oil-producing nations and decision-making by oil
cartel Opec also had the potential to force fuel prices higher, he added.
 
BP told investors that the weakness of the US dollar meant it would spend
more money on infrastructure next year than previously thought. Capital
expenditure in 2005 is expected to match the $14bn the firm is spending
this year.