02 February 2010 10:42 [Source: ICIS news]
(Adds BP group results in last two paragraphs)
SINGAPORE (ICIS news)--UK oil and gas major BP said on Tuesday that its refining and marketing business posted a $1.94bn (€1.40bn) replacement cost loss before interest and tax in the fourth quarter, reversing a $416m profit made in the same period last year, due to weaker refining margin and hefty impairment charges.
“The fourth quarter’s result included a net non-operating charge of $1.85bn … [which] included restructuring charges of $500m and a $1.6bn one-off, non-cash, impairment of all of the segment’s goodwill in the US West Coast fuels value chain relating to our 2000 ARCO acquisition,” BP said in a statement.
In the December quarter, BP posted heavy losses of $2.33bn from the segment’s US operations, offset slightly by the $388m earnings recorded from other regions.
Refining and marketing - which includes the energy giant’s aromatics and acetyls businesses - also recorded $1.07bn in inventory losses in the October to December 2009 period, against hefty gains of $8.50bn in the previous corresponding period, the company said.
For the whole of 2009, replacement cost profit for this business segment shrank to $743m from $4.18bn in 2008.
“2009 earnings were impacted by extremely weak trading conditions, particularly in the fourth quarter,” the company said.
BP said it expected refining margins to remain weak this year as the pace of global economic recovery would be “slow and gradual”.
“While oil markets look well supported by OPEC, the company expects gas markets to remain volatile and refining margins to remain depressed for the foreseeable future,” it added.
Group replacement cost operating profit for the fourth quarter was 33% higher year on year at $3.45bn, but was down 45% at 14.0bn for the full year on lower average oil and gas prices and depressed refining margins.
BP’s reported net profit for the fourth quarter was $4.30bn against a loss of $3.34bn for the 2008 fourth quarter, which included inventory holding losses of $5.93bn. Full-year reported profit was down 28% at $16.6bn.
($1 = €0.72)
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