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BP to extend lead over its arch foe Shell

BP LOOKS set to extend its lead over Royal Dutch Shell when it announces fourth quarter profit around $2bn (£1.3bn) higher than its Anglo Dutch rival tomorrow.

Analysts expect BP to report fourth quarter profit up 81 per cent to $4.7bn on a “replacement cost basis”, a measure that takes into account the cost of replacing the company’s oil reserves at current prices

When Shell reports its fourth quarter numbers on Thursday, its replacement cost profits are expected to have fallen to $2.7bn from $3.89bn a year earlier.

BP is reaping the benefits of a massive cost-cutting programme instigated by chief executive Tony Hayward, who is expected to have saved some $4bn in 2009 against an earlier target of $2bn.

Shell chief executive Peter Voser has also been on an efficiency drive, cutting 5,000 jobs and thinning out management.

Many analysts expect the Anglo-Dutch firm to announce further job losses alongside its results on Thursday.

BP replaced Shell as the biggest oil company by market value in Europe earlier this month for the first time in more than three years.