World Business

The world’s second-largest oil crew raked in record numbers, and it could be time for a unexpected gift custom. But it’s not all ease sailing for BP

by Sarah Arnott

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BP made record profits of $13.4bn (£6.8bn) in the first half of the year, reigniting calls towards a windfall tax on energy companies to better offset the impact of rising prices onward the less well-off.

The creation’s second largest oil company axiom profits rise by 23 per cent compared with the first six months of 2007, and rise by means of 6 per cent to $6.9bn instead of the second quarter alone.

But despite analyst-beating figures, and a quarterly dividend up by 29 through cent, it is not all plain sailing for BP. “We are all operating in interesting times,” Tony Hayward, the chief executive, said yesterday.

“The world’s economy is weakening and the global politic situation is delicate. The oil price continues to be high and reckless. Against this background, BP is making stanch progress.”

The key difference is between the performance of the upstream inquisition and production div-ision, and the downstream refining and marketing one, in the light of oil worth rises that have jumped by encompassing 35 per cent in the be unconsumed three months and topped $144 per barrel at the end of June.

Upstream the business is strong, through profits at $10.8bn in the second quarter, compared with $7.1bn a year ago.

But downstream, the business is being hit through falling demand—particularly in the US—which has pushed profits down to $539m from $2.7bn a year ago. “We have the breeze in our sails in the Upstream, although in Downstream it feels more like sailing into a gale,” Mr Hayward said .

Yesterday’s share price dip—off 2.45 per cent to 506.75p—reflects the concerns.

But the net profits are still consensus-beating for the second quarter in a row, sparking renewed interest in the possibility of the Government levying a windfall tax on energy companies profiting from rising prices.

A report from MPs last week said there is a “compelling rationale” for such a excogitate, and environmental groups are also in favour.

Mike Childs, the campaigns director at Friends of the Earth, aforesaid: “The Government must commence a windfall tax on huge oil set profits and invest the money in succession a comprehensive programme to make homes—especially those of the fuel-poor—far more capacity of work efficient.”

BP refused to be drawn on what it calls “a cause of distress for the Government.”

It keen out, however, that the company paid the UK Exchequer $2.33bn last year. This was out of a worldwide tax hedge-bill of $14.5bn, and made it one of the home’s largest taxpayers in terms of taxes on profits and operations. It in addition collects more $10.5bn in excise duties on behalf of the UK Government.

The oil major also took the opportunity yesterday to use for conversing tough on the matter of TNK-BP, the union venture subject to greater friction with its Russian billionaire investors.

“The other shareholders want to fume up the agreement that they willingly signed in 2003,” Mr Hayward said.

“We are not prepared to do that and will vigorously defend our rights using all lawful means at our control. We will not be intimidated by strong arm tactics.”