BP profits slump as prices tumble

OIL GIANT BP provided further proof of sharp reversals in the oil industry, unveiling a 46% slump in fourth-quarter profit to $2.2bn (£1.5bn). Chief executive Lord Browne said it had been 'tough going', as oil fell more than $10 a barrel, gas prices dropped and refining margins were squeezed. Full-year profit was $13.2bn, a fall of 7%. The year's dividend is up 7% at 22 cents.

But Britain's biggest company impressed the market with a replacement ratio of 191% last year, meaning its reserves grew by almost two barrels for every one it used - almost four times the level recorded by rival Shell.

Commerzbank analyst Clay Smith said: 'The profit numbers are in line with our forecasts. The surprise is the exceptionally high reserve replacement number, which is the prime differentiator between the results from BP and Shell.'

BP missed its production growth target of 5 1/2% in the last quarter, recording an increase of 3%. Shell recently downgraded its production growth targets from 5% to 3%, although it still fell short of this in the fourth quarter.

Lord Browne said the oil market appeared 'broadly balanced' in the current half, but extra Opec oil may be needed later in the year. Gas prices were likely to continue falling.