BP in 2008 profit jump despite sharp 4Q fall (Roundup)

Feb 3, 2009, 11:30 GMT

London - Oil giant British Petroleum (BP) Tuesday reported an annual profit rise of nearly 40 per cent to 25.6 billion dollars despite being hit by the dramatic slide in the price for crude oil in the last quarter of 2008.

For the last three months of 2008, BP's replacement cost profit was 2.58 billion dollars, down 24 per cent from a year earlier and 74 per cent lower than the previous quarter.

Oil prices hit an all-time high of 147 dollars a barrel in July, but have since fallen back sharply to about 40 dollars this week.

Despite the fall in profits at the end of the year, BP's profit rose by 39 per cent for 2008 as a whole.

BP, Europe's second-biggest oil company, said it expected continued low demand for its products as many countries were entering a recession.

'The economic environment remains challenging, with continued slowing of global economies and uncertainty in the global financial markets,' it said.

Last week, BP's rival, Royal Dutch Shell, announced 2008 profits of 31.4 billion dollars, a rise of 14 per cent over 2007.

BP said the fourth quarter was also weak because of a loss of 700 million dollars suffered at its Russian joint venture TNK-BP.

A protracted dispute between BP and the Russian shareholders in the venture was resolved in September when Robert Dudley had to step down as TNK-BP's chief executive.

However, oil analysts in London said that BP's profit figures had remained below forecasts, as challenges continued to exist for the group's Russian business.

'The group's refining business remains under pressure, whilst weather-hit production has been restored at a time of lower oil prices,' said Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers.

BP chief executive Tony Hayward said BP was striving to reduce costs, with 3,000 jobs lost in 2008 and cuts expected to exceed 5,000 by the middle of 2009.