BP dismissed concern over its $10bn (£5.9bn) investment in Russia, insisting that it remained confident in the country's government despite the arrest of the leading oil magnate last weekend.
Lord Browne of Madingley, BP's chief executive, said the detention of Mikhail Khodorkovsky, head of Yukos, was "not relevant to what we're doing" in Russia. Earlier this year, BP said it was forming a joint venture with the oil group TNK, and a related further investment in Sibneft, after agreeing a deal with one of Russia's leading "oligarchs", Mikhail Friedman.
Lord Browne was speaking as the company unveiled third-quarter results. Net profit for the period was $2.87bn, a 25 per cent improvement on last year, thanks to higher oil prices and better margins in its downstream business. However, the figure was depressed by some unexpected one-off items. For the first nine months of the year, profits came in at $9.71bn, 60 per cent better than last year. The company said the performance was "strong in all areas except petrochemicals".
Byron Grote, BP's finance director, said that, should the fourth quarter come in at the average of the first three quarters, BP would make a record profit this year. He said it should be better than an adjusted $12.2bn made in 2001. Before these adjustments, the 2000 result of more than $14bn is unlikely to be beaten.
Peter Hitches, an analyst at Crédit Agricole, said BP's result was more encouraging than Shell's performance, which was reported last week.
The first 33 days of the existence of the TNK-BP venture were included in the third-quarter results, contributing a profit of $114m to BP. Including debt assumed and a related further investment in Slavneft, BP's investment in the Russian venture is $10bn-$11bn.
Referring to the arrest of Mr Khodorkovsky, Lord Browne said: "I don't think a few days makes a difference. We are in Russia for the long term." He said the issue was specific to Mr Khodorkovsky and his case related to alleged tax evasion. The businessman has upset the Kremlin after funding opposition politicians and making statements critical of President Vladimir Putin. Some commentators have suggested the move could presage a crackdown on Russia's oligarchs.
Lord Browne said: "We still have confidence in the Government of Russia ... we have to take a long view." City analysts appeared to accept BP's argument Mr Khodorkovsky's case was a one-off. Jon Wright, of Citigroup, said: "This industry has to do business in risky places."
Third-quarter production was up 1.5 per cent, with the contribution from TNK-BP more than offsetting declines resulting from disposals. BP said it would not be making any more share buy-backs in the fourth quarter as it was putting money towards plugging a pension deficit and on completing its Russian acquisition.
On the project, led by BP, to build a pipeline from Azerbaijan toTurkey, BP said construction was "obviously going to be completed". BP said, should the World Bank and other lenders not provide loans for the governments involved in $4bn scheme, the private sector companies involved would negotiate to extend the money instead.Reuse content