Anger as BP profits soar 148%
Published 28/10/2008 | 14:00
Oil giant BP sparked anger today after posting its biggest ever quarterly profits haul of 10 billion US dollars (£6.4bn).
The company's mammoth earnings for the July to September period is equivalent to around £70 million a day and a whopping 148% above the same period last year.
BP's record performance came on the back of crude oil prices which hit a new peak above 147 US dollars a barrel in mid-July.
Today's results shattered City expectations but drew fire from union leaders and politicians - prompting fresh calls for a windfall tax.
Labour MP John McDonnell (Hayes and Harlington) accused BP of "profiteering" and added: "I will be calling in Parliament for price controls and profit windfall taxes."
Tony Woodley, joint leader of Unite, said oil companies were "banking money faster than they can count it".
"A windfall tax on the oil giants would help six million people heat their homes this winter and would send the clear message that profiteering from the basics of life is not just immoral but will not be tolerated by our Government," he said.
Prime Minister Gordon Brown urged energy companies to pass on falls in the price of oil to consumers through reduced prices for petrol at the pump and fuel to heat homes.
Speaking at 10 Downing Street, Mr Brown did not directly address the issue of BP's profits, but told reporters: "I notice that some companies have brought their prices down and I encourage others to do so to reflect the fact that the price of oil is now below 60 dollars when it used to be, for a few weeks, nearly 150 dollars.
"There has been more than a halving in the price of oil and, just as when the price goes up people see it immediately reflected in the petrol pump prices, we want to see the falling price reflected in the petrol pump prices, and we are determined to see that happens."
Downing Street acknowledged BP generated much of its profits overseas and that it needed to invest in North Sea oil exploration and production.
Motorists and businesses have felt the pain at the petrol pump this year with petrol prices only falling below £1 a litre in recent weeks.
Oil prices have fallen by more than half their July peak to just above 60 dollars a barrel as global recession fears mount, despite moves by oil cartel Opec to cut production.
BP chief executive Tony Hayward said: "Although it has since fallen away sharply, the high oil price of the third quarter obviously helped our absolute result."
The company averaged a selling price of more than 111 US dollars a barrel, compared to just 71 dollars in the same period last year.
Stripping out exceptional gains, BP's underlying "clean" profits of 8.9 billion US dollars (£5.7bn) delighted the City, pushing its shares almost 8% higher.
Dresdner Kleinwort analyst Colin Smith called the results "outstanding". Richard Hunter, head of UK equities at Hargreaves Lansdown, added: "These numbers have comfortably surpassed the top end of expectations and reiterate BP's position as a true oil major."
Mr Hayward said the company was well-set to weather the storm of a global recession and the prospect of falling oil prices.
"I believe that BP is well-positioned to cope with such volatility. Our balance sheet is strong and we have committed less of our portfolio to high-cost options like tar sands and gas conversion than some of our peers.
"We think the current turmoil may in fact create opportunities for us and we will look at those very closely," he added.
Despite the boost from record oil prices, Mr Hayward maintained that BP had also benefited from an improved operating performance.
Progress on major projects such as its vast Thunder Horse platform in the Gulf of Mexico more than offset the impact of hurricanes in the region during a period in which BP produced 3.66 million barrels of oil equivalent a day - 5% ahead of last year on an underlying basis.
A stronger refining and market performance also boosted the group as it reported "good progress" with the turnaround of its struggling refineries.
The oil firm - which expects to spend up to 22 billion US dollars (£14.1bn) on capital investment this year - counts major investors such as pension funds among its shareholders.
BP has upped its dividend payments, which are around 60% higher than a year ago in sterling terms, and Mr Hayward said the firm was delivering on its promises to shareholders.
"Our aim remains unchanged - to grow that dividend through time in line with our view of future sustainable performance. We are steadily and methodically meeting our promises," Mr Hayward added.