A BP company logo is displayed on a fuel pump on the forecourt of a gas station operated by BP Plc in London, U.K. on Tuesday, Jan. 14, 2014. U.K. inflation unexpectedly slowed in December, cooling to the Bank of England's 2 percent target for the first time in more than four years. Photographer Matthew Lloyd/Bloomberg

Quarterly profit at BP was weaker after its refining business swung to a loss, the British oil company reported yesterday, adding it would increase the accounting provision for the 2010 US oil spill by $200 million (R2.2 billion).

BP reported underlying replacement cost profit of $2.8bn for the fourth quarter of last year, 28 percent lower than the same period a year earlier, but ahead of a consensus forecast of $2.7bn.

The lower profit is in step with what has been a torrid earnings season across the “big oil” sector, which is struggling to grow profit amid rising costs, the expense of finding new reserves and weak refining margins.

Exxon Mobil, the world’s largest publicly traded oil company by market value, reported lower-than-expected quarterly profit last week, while Chevron and Royal Dutch Shell both issued profit warnings last month.

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 US’s worst offshore environmental disaster.

The company said the provision to cover the spill’s clean-up, fines, compensation and legal fees rose to $42.7bn from $42.5bn a year earlier.

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, was 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 $1.1bn of the profit. – Reuters