BP Amoco defends UK petrol prices as interim profits hits record $6.3bn

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BP Amoco, the world's third-largest oil company, unveiled record half-year profits yesterday, swelled by higher crude prices, lower costs and the gains from a series of takeovers. But Sir John Browne, group chief executive, parried suggestions that the company is profiting at the expense of UK motorists, who are being urged by campaigners to boycott the group's retail outlets to protest against high gasoline prices.

BP Amoco, the world's third-largest oil company, unveiled record half-year profits yesterday, swelled by higher crude prices, lower costs and the gains from a series of takeovers. But Sir John Browne, group chief executive, parried suggestions that the company is profiting at the expense of UK motorists, who are being urged by campaigners to boycott the group's retail outlets to protest against high gasoline prices.

"Clearly motorists are very concerned about the price of gasoline.... On a comparative basis they feel very hard done by," Sir John said. "It is reasonable for us to make a little bit of money on our gasoline operations. Clearly, less than a penny a litre is very modest."

BP said returns from UK petrol retailing accounted for less than a quarter of 1 per cent of worldwide profits, but declined to give an exact figure.

British motorists were urged this week by the "Dump the Pump" campaign to avoid BP petrol stations once a week from next Monday.

BP says taxes and duties account for more than 60p of each litre sold in UK forecourts.

"We've been selling off gas stations in weaker locations for some time," Sir John said in London yesterday, adding that associated sales of groceries and other services were crucial in keeping the petrol station operations in the black. The company has about 1,500 filling stations across Britain.

Yesterday, the group said that in the six months to 30 June, adjusted replacement cost profits jumped 197 per cent to $6.3bn (£4.2bn), up from $2.12bn in the same period last year and in line with expectations. The results are the first to include the contribution from Atlantic Richfield (Arco), the eighth-largest US oil company, bought by BP for $33.1bn in a deal cleared by US regulators in April.

BP said the combined BP and Amoco operations had $1bn lower costs than this time last year - excluding the cost of selling off the Arco assets as demanded by the regulators - representing half of the $2bn annual savings target. "It is just the beginning for this new company," Sir John said. "We have achieved a great deal in the past 18 months integrating all our operations.... Now we can do more."

Return on average capital employed (ROACE), a key indicator for the industry, was 21.1 per cent in the most recent quarter, well ahead of most rivals' performance. Last week, Royal Dutch Shell said its ROACE hit 16 per cent for the same period. Industry returns have been boosted across the board by rising crude oil prices, which were about double their levels in the first half of last year.

One analysts said: "These are a solid set of numbers, but they don't shoot the lights out."

Shares in BP Amoco ended 14p lower at 593p.

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