BP's profit is more than £500m higher than expected due to strong performance in oil trading

Oil giant BP’s profit was more than half a billion pounds more than expected in the first three months of the year as the business continued to benefit from high energy prices.
By Greg Wright
Published 2nd May 2023, 09:28 BST
Updated 2nd May 2023, 10:09 BST

Bosses revealed on Tuesday that the company made just under five billion US dollars (£4bn) in underlying replacement cost profit between January and March, citing a strong performance in its oil trading business.

It is a reduction from last year – when the financial performance was boosted by extremely high energy prices – but apart from that is the best result that BP has reported in at least a decade.

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The drop from last year was largely due to the fact that BP got less money for the oil and gas that it sold, although this was partly offset by an exceptional performance from its gas marketing division.

BP's profit was more than half a billion pounds more than expected in the first three months of the year as the business continued to benefit from elevated energy pricesBP's profit was more than half a billion pounds more than expected in the first three months of the year as the business continued to benefit from elevated energy prices
BP's profit was more than half a billion pounds more than expected in the first three months of the year as the business continued to benefit from elevated energy prices

It is also around 700 million US dollars (£560m) more than analysts who follow the oil major had thought it would make.

Chief executive Bernard Looney said: “This has been a quarter of strong performance and strategic delivery as we continue to focus on safe and reliable operations.”

The profit immediately sparked criticism, including from shadow energy secretary Ed Miliband, who called it “unearned” and “unexpected windfalls of war”.

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BP has already been hit by extra windfall taxes on the profits it makes from pumping oil and gas from UK waters.

However critics have said the tax allows energy companies to get away with not paying much of it if they invest in drilling for more oil and gas.

BP said it expects oil prices to remain high after a recent decision by Opec+, a cartel of oil-producing countries, to restrict production in order to keep prices up.

Demand from China will also serve to put upwards pressure on both the cost of oil and the cost of liquid natural gas.

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Murray Auchincloss, the chief financial officer, added; “In the first quarter, BP delivered resilient earnings and continues to execute against its unchanged financial frame.

"We are strengthening the balance sheet, investing with discipline to advance our strategy, and are committed to returning 60 per cent of 2023 surplus cash flow through share buybacks with a further $1.75bn announced for the first quarter.

Commenting on outlook for the rest of 2023, BP said: “Looking ahead, BP expects second-quarter 2023 reported upstream production to be lower compared to the first quarter 2023, in both oil production and operations and gas and low carbon energy, including the effects of seasonal maintenance, with the impact predominantly in higher margin regions.

"In its customers business, BP expects higher marketing margins and seasonally higher volumes compared to the first quarter.

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"In refining, BP expects realized margins to be lower compared to the first quarter, mainly driven by weaker middle distillate margins and narrower North American heavy oil crude differentials. In addition, BP expects a higher level of turnaround activity compared to the first quarter.”

BP said it continued to expect both reported and underlying upstream production to be broadly flat compared with 2022.

Related topics:Ed MilibandChina