BP profits fall 17% on lower oil prices and higher costs

BP HAS reported a 17 per cent decline in profits during the first three months of this year, its earnings affected by lower oil and gas prices on the world market and the higher cost of finding and exploiting reserves. Profit was also hit by higher safety costs following a fatal explosion at its Texas City refinery in 2005.

Analysts said that most of Europe's largest oil companies would probably report lower earnings in the first quarter because of the decline in prices compared with the same period last year. UK-Dutch oil company Royal Dutch Shell is due to release its earnings figures at the start of May.

BP revealed that profits across the business have fallen nearly 20 per cent since the start of the year to $4.36 billion (2.18bn).

Lord Browne of Madingley leaves as BP chief executive this July, 17 months ahead of schedule, following the fallout from the Texas City blast and a series of leaks at its Prudhoe Bay field in Alaska.

Nearly one in five shareholders voted against his pay package at BP's annual general meeting earlier this month, the biggest protest vote at BP for a decade.

First-quarter results showed that, while BP still made 24.2 million a day over the first three months of the year, profits were down 17 per cent on a year ago. Output dropped 3 per cent to 3.912 million barrels of oil and gas a day, the seventh consecutive quarter that production has fallen, after equipment failures in Azerbaijan and Alaska.

Yesterday's first-quarter results also revealed that the strength of sterling means dividends for UK shareholders will fall. BP's payout, in dollars, is up 10 per cent but, in sterling terms, the dividend drops 2 per cent to 5.151p per share.