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Oil giant BP in 2013 profits slump



BP has reported underlying replacement cost profits of $13.4 billion for 2013, down from $17.1 billion in 2012. It blamed lost income from asset sales and weaker refining margins.

The oil giant revealed that underlying replacement cost profits – an accounting measure to report profits in the oil industry that considers the fluctuations of oil prices – was $2.8 billion for the fourth quarter. This compares with $3.9 billion for the same period in 2012.

The company said the cause was its divestment programme, weaker refining margins and higher depreciation and exploration write-offs.

It divested $38 billion worth of assets in 2013, to help pay compensations for those affected by the 2010 Deeepwater Horizon oil spill in the Gulf of Mexico. It is also planning to divest another $10 billion by the end of the year.

Bob Dudley, BP’s CEO, said, “BP delivered strong operating performance throughout 2013, with increased asset reliability and major project delivery in both our upstream and downstream businesses.

“Capital discipline is central to BP’s strategy; making the right investment choices, sticking to our capital limits, and actively managing our portfolio in pursuit of long-term value”.

In January, BP lost a legal case after it asked the payments to those affected by the 2010 spill to be suspended. It had labelled them as “unfair”.

In related news, John Manzoni, a former BP executive who came under scrutiny for safety issues relating to the Deepwater Horizon disaster, and for health and safety violations connected to fracking, has been appointed as new head of the Major Projects Authority in the UK.

The government-led body is responsible for supervising budgets and assessing challenges of huge projects, such as the high speed rail scheme HS2 and the new nuclear strategy.

Further reading:

BP finds first major Gulf of Mexico oil reserve since Deepwater Horizon catastrophe

BP contests Deepwater Horizon payback scheme amid fears it could run out of money

Judge criticises BP’s attempts to block compensation payouts

US court grants suspension to BP’s Deepwater Horizon payouts

BP announces $3.7bn profits for third quarter of 2013