BP to use earnings cash to clear remaining Deepwater Horizon liabilities

BP reported third-quarter underlying replacement cost profit of $8.46bn on Friday, up from $2.2bn in the same period a year earlier, as the war in the Middle East drove up oil and gas prices and boosted the profitability of refining. The result exceeded the $7.33bn that analysts had expected.

The company said the jump “mainly reflects significantly higher realised refining margins and significantly higher gas and marketing trading result.” BP’s earnings were bolstered by higher profits from its oil refining business. Although global oil prices remain below the peaks recorded during the 2022 energy crisis, pump prices for fuels including diesel have soared to all-time highs across the UK, Europe and the US in recent months, driven by severe disruptions to refineries in the Gulf region and across Russia.

Meg O’Neill, BP’s chief executive, said: “These are dynamic times with volatility and disruption to trade flows continuing to define energy markets. The industry as a whole has been showing remarkable adaptability. Refineries have been running close to capacity to make up for shortfalls, shipping has been taking different and longer routes, and releases from strategic and commercial reserves are helping to bridge supply gaps.”

The quarterly figures follow Shell and TotalEnergies, which reported their strongest profits since 2022, also in large part thanks to profits made from refining crude into fuel products such as diesel.

BP said on Friday it would use the excess cashflow generated by earnings to address remaining liabilities in full from the Deepwater Horizon oil spill in 2010. Payables and provisions for the spill stood at $5.94bn, according to BP data.

The jump in profits drew criticism from climate campaigners. Danny Gross of Friends of the Earth said: “As millions of households brace themselves for a cold winter huddling under blankets and clutching hot-water bottles as they struggle to pay their bills, BP is raking in huge profits while doubling down on gas and oil production and slashing investment in renewables.”

The Middle East conflict has boosted profits for oil majors, raising questions over how they will allocate the extra cash. BP is expected to set out its first major strategy update under O’Neill on 15 December, which market observers expect will outline the company’s plans to grow its oil and gas production and potentially restart share buybacks from next year.