Hurricanes stop BP hitting targets

BP's reputation took a hit yesterday after the oil giant disclosed that it had failed to reach its production target last year and would incur a $2bn (£1.05bn) charge, mainly to cover write-downs in its petrochemicals business.

BP's reputation took a hit yesterday after the oil giant disclosed that it had failed to reach its production target last year and would incur a $2bn (£1.05bn) charge, mainly to cover write-downs in its petrochemicals business.

Although output in 2004 rose 10 per cent on the previous year, BP narrowly missed its target of four million barrels a day, pumping only 3.995 million barrels

The failure to hit the production target was largely due to damage caused by Hurricane Ivan and a fire on an Egyptian gas platform, which reduced output by 80,000 barrels in the final quarter and contributed to a $250m increase in costs.

Shares in BP largely shrugged off the production setback as investors were cheered by the company's pledge to continue buying back shares after a $2bn share re-purchase in the final quarter.

Output excluding Russia was 5 per cent higher in the fourth quarter, helped by the start of production from Holstein field in the Gulf of Mexico. Production within Russia, where BP's joint venture with TNK has proved the main driver of growth, rose 4 per cent to 882,000 barrels a day in the final quarter.

Most of the $2bn charge relates to the planned spin-off of the olefins and derivatives businesses within BP's petrochemicals division.

Analysts had expected the write-downs to be much higher. BP is also taking a $300m charge after write-downs in its marketing operations.

BP said that its refining margins rose in the fourth quarter, but that its liquid realisations - the average actual sales prices of its products - lagged booming oil benchmark prices during the quarter. BP shares closed 1.5p lower at 506.5p.