Falling oil prices hit BP profits

The UK company said its full-year surplus was 13.96 billion US dollars (8.75bn) in the year to December 31 - down 45 per cent on 2008.

Oil prices slumped in 2009 from their peak of 147 US dollars a barrel during the previous year. Profits for the final quarter rose 33 per cent to 3.45 billion US dollars (2.16bn), but this was below City forecasts.

BP said the lack of a significant hurricane season helped "very strong" production last year - with a particularly mild season in the Gulf of Mexico meaning relatively few disruptions to oil and gas production.

As a result it expects 2010 to be at a lower level, but the firm said its long-term production guidance was unchanged.

Production grew 4 per cent in 2009 and the average across several years is still expected to be around 1 per cent to 2 per cent.

The oil firm has seen a steep reduction in profits from its downstream refining business - where weak demand has hammered margins.

Profits for the full year were 743 million dollars (465.5m), compared with 4.18 billion dollars (2.62bn)in 2008.

BP chief executive Tony Hayward is in the process of a turnaround strategy for the firm, which has lagged rival Royal Dutch Shell in the past.

The company reduced headcount by 3,000 in 2008 with another 5,000 jobs shed last year, amid estimated cost savings of 4 billion US dollars (2.5bn).

It sold off assets last year, including divesting its interests in the Tengiz oil field in Kazakhstan and the pipeline which carries oil to Russia by selling its 46% stake in LukArco to Russia's Lukoil for 1.6 billion US dollars (1bn).