BP woes mount as profit hit and spill costs rise

 
Michael Bow
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OIL giant BP’s earnings were thumped yesterday as it set aside an extra $847m (£540m) to pay costs and litigation fees over the 2010 Gulf of Mexico oil spill.

The multinational reported underlying adjusted profits had dropped from $5.71bn a year ago to $3.68bn for this quarter, as it continued to struggle with safety concerns on the back of the disaster.

It also reported a $5bn overall writedown for the declining value of its North American refineries and bad performance from its shale gas assets.

It blamed “weaker oil and US gas prices” and reductions in output due to maintenance work.

BP group chief executive Bob Dudley said: “We recognise this was a weak earnings quarter, driven by a combination of factors affecting both the sector and BP specifically.”

He added: “Rebuilding trust with our shareholders and other stakeholders is vitally important.”

The firm also fared badly over the half year, with underlying replacement cost profit down to $8.48bn from $11.21bn six months previously.

BP’s woes have been compounded by its dispute with the co-owners of TNK-BP, who on Monday blocked the payment of dividends.

“BP remains committed to Russia,” Dudley said. “We’ve been working with our partners to get a resolution. We’re in this period of negotiating in good faith with all parties. Stay tuned.”