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BP to cut more jobs in addition to 5,000 already announced

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BP warns of more job losses

By Ed Crooks and Maggie Urry

Published: October 28 2008 08:11 | Last updated: October 28 2008 08:11

BP plans to make more job cuts than the 5,000 it has already announced, the oil group’s chief executive said on Tuesday.

Announcing record profits, Tony Hayward told the Financial Times that he was maintaining a “continuous focus to drive productivity and efficiency into BP” as he looked ahead to a more difficult time for the industry.

He said he expected the total number of jobs that would go would be “materially higher” than 5,000.

BP reported underlying post-tax profits of $8.9bn (£5.6bn) for the third quarter, about $2bn ahead of analysts’ expectations. The shares rose more than 5 per cent yesterday, closing up 23½p at 461½p.

The jump in profits to almost double their level in the equivalent quarter of 2007 drew criticism from both the government and opposition politicians who urged oil companies to pass on falling crude prices to motorists in lower fuel costs.

BP hit back, saying it made a “vital contribution to the country’s finances at a time of massive deficits” and that “politicians of all parties should admit that 70 per cent of the petrol price is made up of tax”.

Mr Hayward highlighted the pressures facing the industry as a result of the fall in the oil price, which has fallen from a peak of over $147 per barrel in July to $62yesterday. He said the world was entering “a period of softness” in the oil price as a result of the global economic downturn, but BP was “well positioned to cope”. He said BP’s balance sheet was strong and “we have committed less of our portfolio to high-cost options like tar sands and gas conversion than some of our peers”.

The strong oil price helped profits from the exploration and production business to double to $12.7bn in the third quarter, but production of oil and gas was also up, by an underlying 5 per cent excluding the effect of production-sharing contracts.

There was a strong improvement in the refining and marketing business, which has been hit by problems in the US refineries. Operating profits for the quarter were almost $2bn, up an underlying 70 per cent. Mr Hayward has pledged to simplify the business.

Of the planned job losses, about 3,500 have gone, with the rest to be completed by the end of the first quarter of next year.

EDITOR’S CHOICE

Lex: BP – Oct-28

In depth: Oil – Sep-15

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