BP profits hit by refining weakness

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BP Reuters.

London - BP, the West's no.4 oil company, reported weaker quarterly profits after its refining business swung to a loss, and said it would increase the accounting provision for the 2010 US oil spill by $200 million.

The British company on Tuesday reported underlying replacement cost profit of $2.8 billion for the fourth quarter of 2013, 28 percent lower than the same period a year ago, but ahead of a consensus forecast of $2.7 billion.

BP's lower profits are in step with what has been a torrid earnings season across the “big oil” sector, which are struggling to grow profits amid rising costs, the expense of finding fresh reserves and weak refining margins.

The world's largest publicly traded oil company by market value, Exxon Mobil Corp, reported lower-than-expected quarterly profit last week, while Chevron and BP's European rival Shell both issued profit warnings in January.

BP, unlike its rivals, however, is also dealing with the fallout from the Gulf of Mexico oil spill which killed 11 men and despoiled the surrounding coastline in the United States' worst offshore environmental disaster.

BP said the provision to cover the spill's clean-up, fines, compensation and legal costs had risen to $42.7 billion from $42.5 billion last year.

BP said the fall in its earnings, which were hurt by difficult conditions in its shrinking refining business and costs associated with the start-up of its Whiting refinery in the US, were partially offset by higher earnings from Rosneft.

Rosneft, the state-controlled Russian company into which BP folded its Russian business last year in exchange for a 19.75 percent stake, delivered $1.1 billion of the profits. - Reuters


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