Charge for Texas blast takes shine off record BP profits

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The Independent Online

BP, the oil giant, announced record first-half profits of more than $8.1bn (£4.7bn) yesterday, in spite of taking an $826m hit after the fatal explosion at its Texas City refinery in March.

The leap in profits was fuelled by the surge in oil prices over the past year, with all divisions of the group showing a strong rise in profits apart from its refining and marketing arm, which bore the costs of the Texas incident.

The group said some $700m would be needed to cover fatality and personal injury compensation claims from the blast, which killed 15 people and injured a further 170. Also on the downside, the company conceded that production at its "Thunderhorse" platform, in the Gulf of Mexico, would probably be delayed until next year, after the site was hit by Hurricane Dennis.

BP's chief executive, Lord Browne, remained optimistic about the overall outlook for the group, saying he believed oil prices would stay strong over the coming year, in spite of the rally in recent months in whichthe price briefly topped$60 a barrel. He added that BP's margins remained robust in the company's refining division.

"Our record first-half financial results could not have been delivered without the significant investments made over the last decade," he said. "These are capturing the benefit of the strong trading environment. Discipline in returning capital to shareholders after continuing to invest for the future is allowing us to reduce the number of shares outstanding, further improving our share performance.

"Our ability to capture the benefit of current prices and margin strength underpins continued dividend growth and further increases in share buy-backs, which we expect to be at least $6bn in the second half of 2005."

Analysts were encouraged by the results, which came in line with expectations. But the bumper profits prompted a string of negative comments from trade unions which have been calling for higher pay and pensions for drivers and rig workers.

Tony Woodley, the general secretary of the Transport and General Workers' Union, said: "Our tanker drivers are being told by BP they cannot have a decent pension but now we're told the company has made record profit. This greed must stop. Our drivers, and all BP workers, should get a decent pay and pensions package and there will still be enough left for a windfall tax to sort out the pensions robbery we have seen."