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Higher safety costs hit BP profit Higher safety costs hit BP profit
(about 3 hours later)
BP's latest profits have fallen 12% after it was hit by the declining price of oil and increased safety spending.BP's latest profits have fallen 12% after it was hit by the declining price of oil and increased safety spending.
The oil giant made a profit of $3.9bn (£2bn) in the last three months of 2006, down from $4.4bn a year earlier.The oil giant made a profit of $3.9bn (£2bn) in the last three months of 2006, down from $4.4bn a year earlier.
BP's higher safety spending comes after criticism into its operating standards in the US following a fatal explosion at its Texas City refinery in 2005.BP's higher safety spending comes after criticism into its operating standards in the US following a fatal explosion at its Texas City refinery in 2005.
For 2006 as a whole, BP's profits rose 15% to $22.3bn, lifted by higher oil prices in the first half of the year.For 2006 as a whole, BP's profits rose 15% to $22.3bn, lifted by higher oil prices in the first half of the year.
'Operational issues''Operational issues'
"We remain committed to addressing the recent operational issues while executing our strategy with discipline and focus," said BP's outgoing chief executive Lord Browne."We remain committed to addressing the recent operational issues while executing our strategy with discipline and focus," said BP's outgoing chief executive Lord Browne.
BP must be relieved that along with these numbers 2006 can finally be consigned to history Analyst Richard Hunter Check BP's share priceBP must be relieved that along with these numbers 2006 can finally be consigned to history Analyst Richard Hunter Check BP's share price
BP announced last month that Lord Browne would be retiring at the end of July, 18 months earlier than originally planned.BP announced last month that Lord Browne would be retiring at the end of July, 18 months earlier than originally planned.
He is being replaced by Tony Hayward, who is currently head of exploration and production at BP.He is being replaced by Tony Hayward, who is currently head of exploration and production at BP.
BP's results are calculated on the basis of replacement cost, which reflects the current cost of supplies and is widely seen as the best measure of an oil firm's underlying performance.BP's results are calculated on the basis of replacement cost, which reflects the current cost of supplies and is widely seen as the best measure of an oil firm's underlying performance.
Lord Browne has led BP for 11 yearsLord Browne has led BP for 11 years
Analyst Richard Hunter of Hargreaves Lansdown Stockbrokers said the decline in profits was expected.Analyst Richard Hunter of Hargreaves Lansdown Stockbrokers said the decline in profits was expected.
"BP must be relieved that along with these numbers 2006 can finally be consigned to history," he said."BP must be relieved that along with these numbers 2006 can finally be consigned to history," he said.
"The market will now hope that the departure of Lord Browne will enable a line to be drawn in the sand, so that the company can move forward.""The market will now hope that the departure of Lord Browne will enable a line to be drawn in the sand, so that the company can move forward."
Looking ahead, the firm expects to see "continued growth at close to current rates". Looking ahead, BP cautioned that it expects oil production to fall slightly in 2007.
BP's shares were down 2% in early Tuesday trading. It forecasts that it will produce between 3.8 and 3.9 million barrels of oil per day this year, compared with 3.93 million in 2006.
BP's shares were down 2% in early afternoon trading on Tuesday.
US-wide problemsUS-wide problems
The 2005 explosion at BP's Texas City refinery killed 15 people and injured 180.The 2005 explosion at BP's Texas City refinery killed 15 people and injured 180.
The Texas City blast caused huge damageThe Texas City blast caused huge damage
Last month's independent report into the blast, led by former US Secretary of State James A Baker, found that while BP emphasised personal safety, it was weak on process safety.Last month's independent report into the blast, led by former US Secretary of State James A Baker, found that while BP emphasised personal safety, it was weak on process safety.
The report said the problem existed at all five of BP's US refineries.The report said the problem existed at all five of BP's US refineries.
BP said it would implement the report's recommendations, adding it had taken significant steps to improve safety.BP said it would implement the report's recommendations, adding it had taken significant steps to improve safety.
The firm has also faced criticism for leaks last year at its Alaskan operations.The firm has also faced criticism for leaks last year at its Alaskan operations.