BP Q3 refining & marketing margins plummet

04 October 2006 09:30  [Source: ICIS news]

LONDON (ICIS news)--Energy major BP said on Wednesday that its average global refining margins fell to an estimated $8.40 a barrel in the third quarter from $12.59/bbl in Q2, with stronger overall marketing profits outweighed by lower supply optimisation results.

Margins were also down substantially on the $12.35/bbl achieved in July to September 2005, according to preliminary figures which BP said were subject to change and could differ considerably from final numbers due to be released on 24 October.

The quarter on quarter decline reflected mainly a massive margin reduction in the US. Margins on the West coast plunged to $12.30/bbl from $21.27/bbl in Q2, while those in the Gulf coast dived to $11.47/bbl from $17.74. Midwest margins fell to $11.50/bbl from $14.75.

Refining and marketing margins in Northwest Europe fell to $4.54/bbl from $5.78 in Q2 and in Singapore they almost halved to $3.58/bbl.

Exploration and production performance was hampered by reductions in output from its Prudhoe Bay field in Alaska, although crude oil and natural gas prices in the US were little changed on the second quarter.

BP said its oil and gas production in Q3 was expected to total about 3.80m barrels of oil equivalent per day (boed). Excluding volumes from its TNK-BP operations, production in July to September this year was expected to be about 2.85m boed, down from 3.02m in Q2, reflecting the cutbacks at Prudhoe Bay due to leaks and severe corrosion in pipelines.

The company's net share of oil and gas production from its Russian operation, TNK-BP, was expected to be about 950m boed, down from 999m boed in Q2. The reduction reflected divestments, BP explained.

BP said that group aggregate non-operating items in Q3 were expected to amount to a pre-tax gain of around $2bn (€1.57bn), primarily reflecting gains on upstream asset disposals.

Charges in BP's Other Businesses and Corporate division, which includes equity-accounted investments in China and Malaysia, were expected to be in line with guidance given in February of an annual charge of about $900m (with a variance of plus or minus $200m).

By: Neil Sinclair
+44 20 8652 3214

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