David Simon, chief executive, said: "We want to grow the dividend. We want to make it more competitive, but the issue will be timing. We will look to the sustainability of results in achieving that."
Mr Simon said that the group had to achieve a balance between dividend policy, debt reduction and the strength of the balance sheet. BP has set a target of reducing debt to $8bn by 1996 from $10.5bn last year.
BP said that the the level of performance in 1994 was "close to the best ever" despite an 8 per cent fall in the price of oil and a sharp decline in margins in the refinery business. The profit in the fourth quarter of £427m was ahead of expectations and marked a 36 per cent improvement on the same period last year.
The decline in oil price and the squeeze on refining was more then offset by tight control of costs, improved sale mix and good performance in the chemicals arm. The return on capital employed exceeded 11 per cent on average in 1994, putting BP at the top end of the industry.
Mr Simon said: "It is nice to have your nose out in front in a key performance indicator.
"Last year was one of well-founded performance improvements. Efficiency gains through cost cutting are now being matched by much more widely based improvements."
BP has halved the workforce to about 60,000 since 1989. The emphasis now is on getting the most out of the asset base and improving the competitive shape of the company. Despite the strong performance BP's share price closed down 7 pence at 419p, having reached 428p at one point during the day.
Mr Simon said that the outlook for the oil industry seemed "relatively fair". Although prices were volatile in the last quarter of 1994, the sentiment in the industry was now "reasonably balanced", with increases in demand likely to be matched by higher production.
BP's own oil and gas production is expected to increase by 2 per cent, per year over the medium term and within that gas will increase by an annual 6 per cent.
Oil production from the Cusiana development in Colombia and from Wanaea and Cossack will be coming through by the year-end. The group is on target to bring on stream in 1996 the Harding, Foinaven and Andrew fields in the UK and Mars field in the Gulf of Mexico.
In chemicals, BP expects demand and prices to be firm in the near future and that the business would benefit from high usage of plant and reduced costs. "We now believe we have three core competitive businesses - businesses that can balance each other," Mr Simon said.
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