BP plans to boost profits by $3bn a year

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BP said yesterday that it will boost annual pre-tax profits by $3bn over the next two to three years by driving down costs and streamlining many of its operations.

Speaking to analysts at the company’s annual strategy update, chief executive Tony Hayward claimed that BP’s assets ranked among the best in the industry, but he admitted that the group’s financial performance had room to improve.

“Whichever way you look at it, there are significant opportunities for improvement and in every case firm plans are in place to close these gaps,” Mr Hayward said.

The energy group, which recently overtook Royal Dutch Shell as the biggest oil company in Europe, also extended its medium-term oil and gas production output forecasts.

BP expects to lift output by an average of between 1 and 2 per cent over the next five years. The group is also increasingly confident of further growth to the end of the decade.

Last month, the group reported a replacement cost profit of $14bn for last year, a 45 per cent drop on the company’s 2008 results. Mr Hayward said the company’s medium-term growth would focus on deep-water production, global gas and managing some of the world’s giant oilfields.

BP said cost-cutting and the creation of a new division to manage development of new projects would help it to reach its target for boosting pre-tax profits. The new unit will be based at the headquarters of its exploration and production business in Houston.

The new business will oversee production of 42 new projects in the next five years.