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Last Updated: Tuesday, 24 July 2007, 08:36 GMT 09:36 UK
Lower production hits BP profits
BP petrol station
BP has faced a number of setbacks recently
Falling production and refinery problems has dented BP's second-quarter earnings, which dipped slightly.

Replacement cost profit for the April to June period was down 1% on last year to $6.09bn (3bn).

The results are the first set since Lord Browne stepped down as the firm's chief executive in May after a scandal involving his personal life.

BP has suffered a number of setbacks recently, including a fatal fire at a Texas refinery, and oilfield shutdowns.

But analysts suggested that the figures were an improvement on the first quarter of the year, when BP posted a 17% decline in earnings, as lower oil and gas prices on the world market at the start of the year took its toll

Overall, for the first half of the year, profits at the London-based firm fell 8% at $10.45bn.

The challenges may not be over but at least the rot seems to have been stopped
Richard Hunter Hargreaves Lansdown

The improved second-quarter number has encouraged investors who are looking to the firm's new chief executive Tony Hayward to revive the UK oil giant's flagging fortunes.

"The challenges may not be over but at least the rot seems to have been stopped," said Richard Hunter, head of UK equities at stockbrokers Hargreaves Lansdown.

Further afield

With oil fields in the North Sea drying up, BP will have to look further afield for production growth.

BP said production had dropped by 5% to 3.8 million barrels of oil equivalent per day in the second quarter, compared to 4 million in the same period last year.

But plans to tap into Russia's precious oil and gas reserves - it had a majority stake in joint venture TNK-BP, which owns the giant Kovykta field- recently went awry.

It was forced to sell its stake to Russian gas monopoly Gazprom following pressure from the Kremlin, which has been accused of protectionism.

BP has also been troubled recently by refinery shutdowns, which meant it was not fully benefiting from the recent high petrol prices.


SEE ALSO
BP sells Siberia stake to Gazprom
22 Jun 07 |  Business
BP confirms Browne cash 'on hold'
09 Jul 07 |  Business
BP faces fines after Texas blast
22 Jul 07 |  Business
Top managers blamed for BP blast
03 May 07 |  Business
BP profits decline 17% to $4.36bn
24 Apr 07 |  Business
Higher safety costs hit BP profit
06 Feb 07 |  Business

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