BP profits rise 42% after oil and gas increases

EUROPE’S second-largest oil company BP’s Plc reported profit rose 42% because of higher oil and natural gas prices and said it may spend $2.3 billion to cover pension liabilities.

Second-quarter profit rose to $3.12bn, or 14 cents a share, from $2.2bn, or 10 cents, a year earlier, excluding special items and the amortisation of acquisition costs, BP said Shares fell as much as 1.7% on investor concern the pension costs may limit stock buybacks.

Like bigger rivals Royal/Dutch and Shell Group, BP and chief executive Lord Browne are benefiting from a surge in US natural gas prices and export disruptions from Venezuela, Iraq and Nigeria.

OPEC meets tomorrow after keeping London oil prices at an average $28.30 this year, about $10 higher than in the 1990s.

The shares of BP, the biggest north American natural gas producer, fell 1.25p to 421.5p, erasing earlier gains in London. BP stock declined by a fifth last year, more than the 14% drop in Shell’s London- traded shares, in part because BP missed targets to expand output.

The company expects to make payments of as much as $2bn to its pension funds in the second half of 2003, after spending $300m in the first half.

The pension payment comes on top of capital expenditure of as much as $14.5bn this year and a $6.15bn Russian oil venture.

Crude oil in the US was around $30 a barrel yesterday in New York. Some investors doubt oil prices will stay at current levels, leading to lower profit in coming months.