BP has said a plan to cut £4.7 billion from back office costs helped offset an otherwise difficult quarter for its refining business.
The company’s refining and marketing business saw replacement cost profits – a standard financial measure used in the oil industry – fall by a third year-on-year to $729 million (£475 million) for the first quarter to 31 March.
In its results, BP said the refining and marketing division suffered from weaker supply than the same quarter last year, as well as from a poor environment for refining and from rising crude oil prices. But it said the problems were “partially offset by operational improvements and further cost efficiencies in the fuels value chains, and continued strong performance in the international businesses”.
The division, which like the rest of the group has standardised on Oracle business intelligence and IBM asset management systems, has been a principle focus of the company-wide cost cutting plan, and is expected to deliver two-thirds of £2 billion cuts due over the next two to three years. During the previous quarter alone, the division spent $492 million (£320 million) on restructuring and rationalisation.
It was the only division to suffer in an otherwise highly positive quarter, in which group profits more than doubled to £3.6 billion. BP was bolstered by fast growth in income from its exploration and production divisions which spent approximately a fifth as much on cost cutting – focusing on project management and procurement – and nearly doubled profits to $8.3 billion (£5.4 billion).
Some £2.7 billion has already been cut from group-wide costs in the last two years, BP confirmed last month, leaving a further £2 billion targeted for the coming years.
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