BP reports drop in profit and takes hit from US wind farms

It had been expected to make around four billion dollars (£3.3bn).

The business said production in its gas and low carbon energy division had been around 1.8 per cent lower in the first nine months of the year than last year.

Oil production, however, was 6.1 per cent higher.

BP said it expects recent production restrictions from the Opec+ group of oil-producing nations to support prices, as will a “continued demand rebound”.

In June, the business and Norway’s Equinor filed a request with the authorities in New York to renegotiate the agreements they had on three wind farms amid soaring inflation and delays.

But this was refused earlier this month, prompting BP to take a 540 million dollar (£444m) pre-tax impairment charge.

Murray Auchincloss, the finance boss who is now serving as interim chief executive, said: “This has been a solid quarter supported by strong underlying operational performance demonstrating our continued focus on delivery.”

He added: “As we laid out at our investor update in Denver, we remain committed to executing our strategy, expect to grow earnings through this decade, and on track to deliver strong returns for our shareholders.”

Richard Hunter, Head of Markets at interactive investor, commented: “BP has ploughed on once more, buoyed by a higher oil price and a strong operating quarterly performance.

“Indeed, BP’s own headline – “Performing while transforming” – encapsulates the current state of affairs, as the group continues to make profitable progress while transitioning towards becoming a fully integrated energy company.

"This quarter has seen further progress in the likes of resilient hydrocarbons, while an investment of $100 million to Tesla for ultra-fast chargers in the US is another step towards EV charging and convenience in its forecourts.

“In addition, the industry as a whole is under increasing pressure to move away from traditional fossil fuels to cleaner replacement energies, and this has tended to weigh on the sector, not least of which is from an ESG (environmental, social, and corporate) governance perspective.

“The move to renewables is yet to prove consistently profitable or practical, as evidenced by the current travails of the planned wind farms off the coast of New York, and represents the challenge which the move towards cleaner energy brings.

Mr Hunter added: "Even so, in the meantime the oil majors remain an important constituent of many standard portfolios given their cash generation and high levels of shareholder returns when circumstances allow.”