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Last Updated: Tuesday, 25 April 2006, 11:04 GMT 12:04 UK
UK petrol 'could top 1 a litre'
BP tanker
Oil prices are set to remain strong, BP said
Petrol prices in the UK could soon top 1 a litre if oil costs keep rising, the head of BP has told the BBC.

BP chief Lord Browne said soaring crude oil prices "may well create petrol prices above a pound a litre".

The average cost of a litre of unleaded petrol in the UK has recently moved above 95.5 pence.

Lord Browne's comments came as BP reported a dip in profits after damage to oil rigs from last year's US hurricanes hit output.

BP said its profit for the first three months of the year was $5.265bn (3bn), down 4% on last year.

Output was down to 4.035 million barrels equivalent of oil and gas a day, from 4.101 million at the same point last year.

Prices to stay 'strong'

Oil prices have remained buoyant in recent months due to a combination of strong demand, worries over disruption to supplies from Nigeria and concerns over Iran's nuclear programme.

Lord Browne, BP chief executive
We're not passing anything like the complete effect of crude oil prices onto the consumer
Lord Browne, BP chief executive

The price of US light, sweet crude oil - a benchmark for global oil markets - hit a record high of more than $75 a barrel on Friday.

Unveiling the results, BP chief executive Lord Browne said that oil prices were expected "to remain strong".

World economic growth appeared "robust", Lord Browne said, while "ample" stocks and increased output from the Opec oil producers' cartel have failed to stem price rises.

Speaking to the BBC, Lord Browne said UK petrol at 1 a litre was "possible" if crude prices continued to increase.

"We're not passing anything like the complete effect of crude oil prices onto the consumer," he said.

"You can see that between the first quarter of last year and this year, 30% increase in crude oil prices, and 11% in petrol prices.

"But if crude oil prices keep going up, and we don't fully understand why crude oil prices are going up at this rate, then indeed they may well create the price of petrol above a pound a litre."

Rebound

The high oil prices helped BP to offset the dip in output following damage to rigs in the Gulf of Mexico caused by last year's hurricanes.

BP's results were also helped by a better-than-expected performance from its refining division.

The firm's profit measure - "replacement cost profit", which reflects the current cost of supplies - in the refining and marketing unit rose to $1.6bn from $1.4bn a year ago, despite a dip in margins from the end of 2005 and maintenance being carried out on BP's Texas City refinery.

BP said that the refinery was now running at 200,000 barrels a day, and further units there would be brought on-stream over the rest of the year.

Stripping out one-off costs, BP's underlying profit for the quarter was $5.282bn, up from $4.96bn in the same period of 2005 and better than analysts' forecasts of $5.21bn.


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Lord Browne speaks about the rising cost of oil



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