BP Plc reported a “significant
bounceback” in its U.S. refining and marketing operations in
the second quarter because of cost-cutting and higher margins.
BP made about $300 million from its trading operations in
the three months ending June, Iain Conn, the company’s head of
refining and marketing, said in a presentation on BP’s website.
The company posted a profit before tax and interest of $2.1
billion from refining and marketing, up from $680 million in the
year-earlier period, BP said in an earnings statement earlier
this week. “This is the strongest absolute profit since the
second quarter of 2006” when refining margins were about $13 a
barrel, compared with about $5 a barrel now, Conn said.
BP is seeking to improve profitability in its refining and
marketing business by an annual $2 billion to $2.5 billion in
the next two or three years, he said.
The oil company had an “underlying improvement” of about
$500 million by mid-2010 from the end of last year after cutting
costs and “margin capture,” Conn said.
“We are now beating the competition, we are no longer
catching up,” Conn said. Trading had a “normal quarter,” he
said.
BP cut its refining and margin operation breakeven level
“to well below” $5 a barrel in the first half from $5.70 in
2009, based on BP’s Global Indicator Margin, Conn said.
Tremendous Signal
Its U.S. refining and marketing operations are “now
strongly back in profit and we are seeing a significant
bounceback in the value chain performance, and I think this is a
tremendous signal for the future,” Conn said.
Global refining margins, or the profit from turning crude
oil into fuels, rose to an average of $5.49 a barrel in the
second quarter, the highest in more than a year, according to BP
data.
The company had expected refining margins to average $3 to
$6 a barrel in 2010 and beyond, Conn forecast in April.
Royal Dutch Shell Plc reported a loss of about $100 million
from refining in the period, Chief Financial Officer Simon Henry
said yesterday. “Trading had a relatively quiet quarter” on
low oil price volatility, he said.
To contact the reporters on this story:
Eduard Gismatullin in London at
egismatullin@bloomberg.net;
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