BP Oil, Gas Output Tumbles Yet Again

By JANE WARDELL

LONDON – Energy company BP PLC said Monday that oil and gas output fell for the fourth straight quarter and that its refinery explosion in Texas will cost it $500 million more than it had anticipated.

In a trading update, BP said that production in the second quarter fell by 2.5 percent to 4.01 million barrels of oil equivalent per day, largely because of changes to its Venezuelan operations. That is down from 4.112 million in the similar period a year ago and 4.035 million in the first quarter.

BP is struggling to increase its output as Venezuela enforces its demand for a majority share in operations by foreign companies and as a storm-damaged platform in the Gulf of Mexico takes months to repair.

BP said the quarterly production drop was mainly the result of divestments, primarily its obligation to shift its assets in Venezuela to a state-controlled joint venture.

The company said earlier this year that it expects to pump 4.1 million to 4.2 million barrels a day this year, assuming an oil price of $40 a barrel.

The price of Brent crude rose 35 percent to $69.53 a barrel in the second quarter from the same period last year, and was up 12.5 percent from the first quarter of 2006.

The company said the $500 million charge related to the Texas City refinery explosion in last year in which 15 workers died was in addition to a $700 million charge announced last year.

BP shares rose despite the negative news and closed up 1.2 percent at 638 pence ($11.74) on the London Stock Exchange.

Investec analyst Bruce Evers called the production figures “a bit of a disappointment” but noted that new fields are expected to come on stream in the second half of the year in the Gulf of Mexico and Angola.

The company declined to comment on a report that it had suspended three of its U.S. gas traders allegedly at the center of a propane price-fixing scheme. The Financial Times newspaper said that the three men were placed on indefinite administrative leave.

BP spokesman Ronnie Chappell said the company had no comment on the report.

“As a matter of policy, we don’t comment on personnel matters,” he said.

Allegations of BP price manipulation surfaced Wednesday, when a civil lawsuit before the U.S. Commodity Futures Trading Commission alleged that five natural gas traders at the company’s Houston outpost cornered the market for home-heating propane.

BP is scheduled to report its second-quarter earnings July 25.

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