<a href=news.independent.co.uk>news.independent.co.uk By Saeed Shah and Philip Thornton 30 April 2003

BP announced its biggest ever profit bonanza yesterday, making $3.7bn (£2.3bn) in the first quarter of the year, or $41m a day.

The figure – more than double the $1.6bn made for the period last year – was the highest for any quarter and was driven by higher gas and oil prices. During the first three months of the year, the oil price averaged $29.8 a barrel, as the market worried about the Iraq war and disruptions in supply from Nigeria and Venezuela.

Analysts warned however that the outlook was not as rosy and the company also conceded that trading conditions had deteriorated since the end of the quarter.

Peter Hitchens, an analyst at Crédit Agricole, said: "The first quarter was a windfall quarter. Now it's back down to reality."

Underlining the point, the fall in the world price of oil continued to gather pace, amid speculation that it could fall through the $20 a barrel mark. Crude prices fell to their lowest level in five months, with Brent crude in London falling as low as $23.05, its lowest since November and down from a recent peak of $34. Analysts believe Opec, the oil producers' cartel, did not cut production enough last week to prevent a sharp rise in stock levels.

Lord Browne of Madingley, BP's chief executive, said: "The prospect for prices depends upon a particularly wide range of uncertainties, which include the timing and level of the return of Iraqi oil exports and the extent to which Opec's earlier production increases are reversed."

He defended the level of profits made by BP, which he said was good for the whole of the UK. The company stressed that it makes little money through petrol retailing in the UK, which has recently seen an outcry over pump prices. "Increased profits at BP pretty much flow directly into pensions funds [from dividend payments].... We are in the business of making money in a very responsible way, in the service of our shareholders," Lord Browne said.

Turning to Iraq, he said BP's strategy was not dependent on working there, and that the company would only look at opportunities presented by a "future legitimate Iraqi government".

Analysts believe the continued economic weakness combined with the impact of the deadly Sars virus on demand for air travel will continue to knock the oil price. Meanwhile, as the world moves into the second quarter of the year and the cold winter weather fades, the need for Opec oil is swiftly declining. Oil stocks in the US, the world's largest consumer, have risen for two weeks in a row and figures out today will show another rise. The situation could turn out to be like 1997 when Opec watched from the sidelines as the oil price fell below $10 as the unexpected Asian financial crisis sapped demand.

Opec ministers met last week to tackle the sharp fall in the oil price since the swift end to hostilities in the Gulf, which saw oil on New York markets slump from $39.99 a barrel to $25.38. The cartel had been expected to order a definitive cut in output but instead, in effect, legitimised a large portion of the extra supply its members pumped out in the run up to the war.

Tue April 29, 2003 08:00 AM ET

NEW YORK (<a href=reuters.com>Reuters) - Halliburton Co. HAL.N , the world's No. 2 oilfield services company, on Tuesday said first-quarter earnings rose as North American drilling activity overcame international results hurt by war and political unrest in such key markets as Venezuela, Nigeria and the Middle East.

Houston-based Halliburton, which was hired in March by the Defense Department to control Iraqi well fires and repair the country's oil infrastructure, said its net income rose to $43 million, or 10 cents per share, from $22 million, or 5 cents per share, a year earlier.

In December, the company announced a $4 billion settlement package to more than 200,000 asbestos claims against it, the final details of which were still being negotiated. The settlement with plaintiffs who said they were harmed by asbestos products made by a Halliburton subsidiary is expected to take effect later this year.

Halliburton's stock closed up 11 cents at $21.31 per share Monday on the New York Stock Exchange.

BBC News

British oil giant BP has made $3.7bn (£2.3bn) in just three months, its largest ever quarterly profit.

BP's coffers were boosted by a sequence of world events that sent the oil price soaring.

These include the run-up to the war in Iraq, the national strike in Venezuela which blocked oil exports, and civil unrest in Nigeria which stopped production.

The profits represent a 136% rise over the same period a year earlier.

It means that BP was earning $41m a day during January, February and March.

"Oil markets have been driven by the impact of war in Iraq, together with the loss of Venezuelan and Nigerian exports and a cold winter in the northern hemisphere," said BP chief executive Lord Browne.

Worrying outlook?

However, oil prices have now decreased significantly after the war in Iraq did not damage world supplies as much as feared.

And that is expected to lead to a slump in BP's profits during the current quarter.

The benchmark crude oil price averaged $31.5 a barrel during the first quarter but was languishing at five-month lows of $23.05 a barrel on Tuesday.

Analysts also expressed concern about other elements of BP's business, including weak demand for chemicals and lower refining margins.

"They look good at the top but when you read more into the statement there are some uncertainties," said one dealer.

BP's shares rose at first but fell back to end the day down 3.25 pence at 399.75p.

Tue April 29, 2003 05:08 AM ET

LONDON (<a href=asia.reuters.com>Reuters) - Giant British oil firm BP Plc delivered its biggest ever quarterly profit on Tuesday boosted by war in Iraq, strikes in Venezuela and unrest in Nigeria.

Net profit adjusted for exceptional items and to reflect the current cost of supplies grew 136 percent from a year earlier to $3.729 billion, at the top end of analysts' expectations, as supply concerns linked to events in these three key producing nations boosted the price of crude oil.

Oslo |<a href=www.gulf-news.com>Gulf News-Reuters | 29-04-2003

Norwegian Statoil reckons it will reach its oil and gas output goals for 2007 but is worried about fading prospects after that unless it gets access to new exploration areas, its chief executive said yesterday.

Olav Fjell also said that gas activities were playing an increasingly important role, estimating gas would replace oil as its key business within 20 years.

"We are in a phase that we can call the gas age," Fjell said on the sidelines of a first-quarter result presentation. "I think gas will be more important than oil for all of us within a 20-year period."

Statoil, Norway's biggest oil and gas producer and the biggest Nordic firm by turnover, said first-quarter profits were boosted by firm oil production and prices, and stuck to a 2004 output goal of 1.12 million barrels of oil equivalent per day (boed).

It said January to March pre-tax profits rose 17 per cent year-on-year to 12.58 billion Norwegian crowns ($1.77 billion). The company reaffirmed its key performance and production targets for 2004.

But the profit lagged analysts' forecasts of 13.08 billion as a strong Norwegian currency undermined dollar-denominated earnings and gas prices fell.

It targeted production of 1.06 million boed this year. It did not spell out longer-term output targets but Fjell said the group was on track to reach an earlier stated goal of producing 1.26 million boed in 2007.

"Today, we are producing roughly one million barrels (oil equivalent) a day. I think that will last until 2007," Fjell said. "We will reach the goals that we have communicated."

But he said he feared authorities' reluctance to open northern areas of the Norwegian continental shelf for exploration could dampen future production prospects for Statoil and its peers, and damage Norway's future as an energy nation.

Norway, pumping about three million barrels of oil per day, is the world's third-biggest oil exporter after Saudi Arabia and Russia, and a major gas supplier to Europe.

"How long we will manage to keep current output levels will depend on whether we get access to new exploration areas so that we can put new areas in production. If we don't get that, we'll see lower production volumes in the future," Fjell said.

"When I'm worried about exploration on the Norwegian shelf, I'm talking about production volumes further out in time, after 2007," Fjell said.

He expressed high hopes for Norway's 18th offshore licensing round and for authorities' environmental impact study of possible future oil activities in the Arctic Barents Sea, due to be completed in autumn this year.

Statoil's giant Snoehvit liquefied natural gas (LNG) project, due to come onstream in 2006, is so far the only active energy development on the Norwegian side of the Barents Sea.

The project has spurred sharp environmental protest and political resistance for further exploration in the area, which is believed to contain huge gas reserves which oil firms hope can compensate for maturing North Sea fields further south.

Fjell said international operations would gradually make up a bigger share of overall oil and gas output, with the biggest focus on Iran, Venezuela, Brazil and Azerbaijan.

"On a longer-term basis, we hope to be able to do something in Russia," he added. "We have worked mostly with Lukoil, but we are also talking to others. But that's far ahead in time."