BP's refining, marketing returns to profit in Q4

06 February 2007 08:20  [Source: ICIS news]

By Florence Tan

SINGAPORE (ICIS news)--BP’s refining and marketing business returned to profit in the fourth quarter from the same period a year ago on stable production and an absence of rationalisation costs, the UK energy major said on Tuesday.

That business includes much of its remaining chemicals activities.

BP’s replacement cost operating profit for the fourth quarter was at $312m (€240.2m), bouncing back from a loss of $165m in the same quarter a year ago, it said in a statement.

The company gradually recommissioned its Texas city refinery after a storm-related shutdown, it said. The absence of storm-related disruptions to its pipelines and marketing businesses also helped improved its bottomline.

Rationalisation costs of $467m incurred in the fourth quarter of 2005 were absent in 2006, it said.

Chemicals production in the fourth quarter of 2006 totalled 3.57m tonnes, up from 3.41m in the same quarter a year ago.

For the full year, the replacement cost operating profit for its refining and marketing business rose 20.5% to $5.3bn from a year ago.

On operations, BP’s chief executive John Browne said the company remained committed to addressing the recent operational issues.

The company earlier said it will implement safety recommendations made by an independent panel in a report which faulted BP's top management for its inadequate policies on process safety.

The report concludes an investigation led by former US Secretary of State James Baker into an accident at BP’s Texas City refinery that killed 15 workers in March 2005.

On the whole, BP’s fourth-quarter replacement cost profit fell 12% to $3.9bn from the same period a year earlier, but it posted a record replacement cost profit at $22.3bn for 2006, up 15% from a year ago.

"The fourth quarter result reflects the recent declines in the overall price and margin environment, as well as operational factors and increased safety and integrity investments, Browne said.

"Our record full year replacement cost profit and operating cash flow supported the group’s capital programme and increased dividends and share buybacks."

Profits from BP’s retained olefins and derivatives operations and petrochemicals investments in China and Malaysia were reported under "other business and corporate".

This segment reported a fourth-quarter replacement cost loss of $276m, down from a deficit of $409m a year previously. The full-year replacement cost loss was at $947m, down from a $1.2bn loss a year ago.

 ($1=€0.77)

By: Florence Tan
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