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BP's Q2 net profit soars 65% to US$3.37b

BP said on Tuesday (July 29) its net profit surged 65 per cent in the second quarter, boosted by high oil prices, but warned that more economic sanctions against Russia could hit performance.

LONDON: BP said on Tuesday (July 29) its net profit surged 65 per cent in the second quarter, boosted by high oil prices, but warned that more economic sanctions against Russia could hit performance.

Earnings after taxation rallied to US$3.369 billion (S$4.18 billion, 2.508 billion euros) in the three months to June, compared with US$2.042 billion a year earlier, BP said in a results statement. The group added that its replacement-cost profit, the current accounting figure which excludes changes in the value of oil inventories, rose by almost a third to US$3.18 billion in the second quarter.

BP also increased its shareholder dividend to 9.75 cents a share, from 9 cents a share. "It's a good quarter. It's a good solid start to the first half of the year," said chief executive Bob Dudley in a video released alongside the results. "The environment has been down in some ways, offset by oil prices in another. We've been bringing on new projects, five new upstream projects so far this year (with) two more to go by the end of the year."

The British company, which owns almost 20 per cent of Russian state oil giant Rosneft, warned however that further economic sanctions against Russia could "adversely impact" its performance. "Any future erosion of our relationship with Rosneft, or the impact of further economic sanctions, could adversely impact our business and strategic objectives in Russia, the level of our income, production and reserves, our investment in Rosneft and our reputation," BP said in the earnings release.

It added: "To the extent we fail to maintain a good commercial relationship with Rosneft in the future, or if as a result of our non-controlling interest in Rosneft ... we are unable in the future to exercise significant influence over our investment in Rosneft or pursue other growth opportunities in Russia, our business and strategic objectives in Russia and our ability to recognise our share of Rosneft's income, production and reserves may be adversely impacted."

Later on Tuesday, the EU is set to approve further sanctions against Russia over its role in the Ukraine crisis and the downing of Malaysia Airlines flight MH17. Western powers, which have accused Moscow of fanning the rebellion by supplying it with weapons including the missile system allegedly used to shoot down MH17, have urged new sanctions against Russia.

On Tuesday, member states are expected to take the next step, approving sanctions in four key areas: access to capital markets, defence, dual-use goods and sensitive technologies, including in the energy sector.

BP, seeking to reposition itself after the devastating Gulf of Mexico oil spill in 2010 which has cost it tens of billions of dollars in compensation and fines, agreed in 2012 to sell Rosneft its 50 per cent stake in joint venture TNK-BP. This in turn gave BP a 19.75 per cent holding in the Russian energy company.

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