BP has posted a 4 per cent drop in profit for the first quarter of this year despite rising oil prices.
The decline in earnings to US$5.37 billion (Dh19.72bn), excluding one-off items and inventory changes, from $5.65bn in the same period last year reflected lower oil and gas production after BP sold more than $24bn of assets to pay costs related to its Gulf of Mexico oil spill.
BP's output in the most recent quarter averaged 3.56 million barrels of oil equivalent per day, 11 per cent lower than the first quarter of last year.
In addition to asset divestments, the decrease reflected the effects of the Gulf of Mexico drilling moratorium that the US imposed after the spill last April at BP's deepwater Macondo well.
Production was also affected by maintenance at oil platforms in the North Sea and Angola, and an interruption of oil flow through the Trans-Alaska Pipeline System, which BP operates, following a minor spill.
"We expect second-quarter production to reflect the continued impact on operations in the Gulf of Mexico following the drilling moratorium," the company said.
BP is seeking to offset the effects of the biggest oil spill in US waters with high-impact exploration and by expediting development projects.
But the company also disclosed yesterday that it had suspended its $1bn exploration and drilling programme in Libya because of international sanctions imposed on the regime of Muammar Qaddafi.
"We will fully comply with sanctions and will continue to examine them in detail to ensure our compliance," BP said.
The only major piece of good news in the company's latest quarterly report was that output from the giant Rumaila oilfield in Iraq was more than 10 per cent above the initial production target on which BP and its partner, China National Petroleum Corporation, had agreed with Baghdad.
"Meeting this production target is a significant milestone and triggers the recognition of production and earnings," BP said. "We expect to commence liftings [oil exports] in the second quarter."
The company also said its expected $7.2bn investment in 23 oil and gasfields owned by India's Reliance Industries, announced in February, was still awaiting Indian regulatory approvals.
A $16bn share-swap and Arctic oil-exploration deal with Russia's Rosneft also hangs in the balance, as BP awaits an arbitration ruling on objections raised by its Russian affiliate TNK-BP.
BP's results disappointed analysts, who predicted flat first-quarter earnings.
"BP's numbers will probably be among the poorest in its peer group," predicted Iain Armstrong, an analyst with Brewin Dolphin in London.
Other big oil companies due to report their first-quarter results in the coming days are expected to post sharply higher earnings than a year ago because of stronger oil prices.
