BP asset sale hits profits as output slides

OIL giant BP revealed a two per cent dip in profits in the first-quarter of this year, as its fire sale to cover the cost of the Gulf of Mexico oil spill ate into production levels.

The energy firm made replacement cost profits of $5.5bn (£3.3bn) in the three months to 31 March, from $5.6bn during the same period a year earlier.

Profits were hit by an 11 per cent slump in production volumes and higher charges associated with the Deepwater Horizon spill.

BP has disposed of $24bn worth of assets, including several high-value oil fields and gas reserves. The firm is targeting $30bn worth of divestments to cover the cost of the spill.

Charges relating to the Macondo well disaster, which claimed the lives of 11 men, totalled $40.9bn for the firm last year.

The cost incurred in the first three months of this year narrowed to $384m, from $1bn in the fourth-quarter of last year.

Bob Dudley’s firm said it expected to restart drilling in the Gulf of Mexico in the second half of this year.

The energy behemoth said it was pursuing a range of options to try and solve its dispute with its Russian partners TNK-BP over a planned tie-up with Kremlin-backed oil firm Rosneft.

The $16bn share swap could boost BP’s ailing output should it successfully complete, however oligarch shareholders in TNK-BP have launched a tribunal to get the deal annulled.