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BP Profits Jump as Oil Prices Smash Record Highs - ASHARQ AL-AWSAT English Archive
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British energy giant BP said Tuesday its net profit rallied by 28 percent to 9.47 billion dollars (6.02 billion euros) in the second quarter as oil prices surged to record highs.

BP’s revenue soared by 49 percent to 111 billion dollars in the three months to June 30 compared with a year earlier as gas prices also surged, but production was flat at 3.83 million barrels of oil equivalent per day.

At a press conference to discuss the results, chief executive Tony Hayward also vowed to defend BP’s rights in the face of “intimidation” and “strong-arm tactics” from Moscow regarding the Anglo-Russian joint venture TNK-BP.

BP, the world’s third biggest energy group, last week said it had recalled all 148 staff sent to Russia to work for TNK-BP amid ongoing Russian attempts to end foreign control of major energy assets.

BP added on Tuesday that net profit, excluding gains from the value of its crude oil inventories, grew six percent to 6.85 billion dollars in the second quarter.

Analysts had expected the figure to reveal profit of 7.82 billion dollars, according to Dow Jones Newswires. In the first six months of 2008, BP’s net profit surged 41 percent to 16.92 billion dollars.

BP, Europe’s second largest oil company, added that its share of net profit at TNK-BP almost doubled to 1.35 billion dollars in the second quarter from 686 million dollars one year earlier.

Kremlin adviser Arkady Dvorkovich on Monday rejected charges of political interference in the activities of TNK-BP and said the company’s activities were not in danger.

However on Tuesday, Hayward said Russian investors in the joint venture wanted to tear up the agreement they had “willingly signed” in 2003.

“We are not prepared to do that and will vigorously defend our rights using all legal means at our disposal. We will not be intimidated by strong-arm tactics,” BP’s boss told reporters.

The dispute between BP and its Russian partners in TNK-BP, which accounts for a quarter of BP’s global oil output, is being closely watched as a test for the foreign investment climate in Russia’s energy sector.

In early afternoon trade on Tuesday, the share price of BP was up 2.65 percent at 530.25 pence on London’s FTSE 100 index, which was up 0.47 percent at 5,337.40 points.

US broker Merrill Lynch maintained its “underperform” rating on the share price. In a note to clients it said its cautious stance was “largely driven by valuation and our view that the shares do not warrant a premium rating despite some signs of positive earnings/business momentum after a difficult few years.”

During the second quarter meanwhile, crude futures spiked to a series of record highs as the dollar weakened and as investors also sought a haven amid unrest in major oil exporters Iran and Nigeria.

Oil prices went on to hit record highs above 147 dollars a barrel at the start of the third quarter, on July 11.

They have since fallen by more than 20 dollars on concerns that the global economic slowdown will weigh on energy demand, particularly in the United States — the world’s biggest consumer of oil.

High oil prices have helped to boost profits at BP as it struggles to increase energy production. The group’s net earnings had fallen in 2007 as it was hit by declining output following a turbulent year.

BP had faced a major boardroom scandal in 2007 as well as continued fallout from a fatal blast at its Texas City refinery in 2005 and a major pipeline leak in Alaska in 2006.

The unrest led to Hayward being appointed chief executive and he quickly announced the axing of 5,000 jobs in a cost-cutting drive.

BP is the world’s third biggest energy company in terms of stock market capitalisation behind number one ExxonMobil and Royal Dutch Shell.

BP’s Anglo-Dutch rival Shell publishes its second-quarter earnings on Thursday.

Asharq Al-Awsat

Asharq Al-Awsat

Asharq Al-Awsat is the world’s premier pan-Arab daily newspaper, printed simultaneously each day on four continents in 14 cities. Launched in London in 1978, Asharq Al-Awsat has established itself as the decisive publication on pan-Arab and international affairs, offering its readers in-depth analysis and exclusive editorials, as well as the most comprehensive coverage of the entire Arab world.

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