The hurricanes that swept through the Gulf of Mexico have wiped more than $700m (€573m) from the third-quarter profits of BP, Europe's biggest oil company, and caused it to miss its production target for the year, the group said on Tuesday.
BP expects the storms to have cost it about 145,000 barrels a day in lost production in the third quarter. That was about double analysts' estimates, causing some investment banks to cut BP's profit forecasts.
The hurricanes also forced a slowdown of activity at BP's Texas City refinery, preventing the company taking full advantage of soaring refining margins. The high cost of fuel probably caused BP to lose money at petrol stations. Goldman Sachs cut BP's expected operating profit for the quarter by $1.45bn.
The oil company said in a business update: “Trading conditions experienced by BP in the third quarter of 2005 were significantly impacted by Hurricanes Katrina and Rita and their aftermath.” BP is still expected to deliver bumper profits this year, driven by soaring oil prices, in spite of its problems in the Gulf of Mexico. Shares fell 2.7 per cent yesterday to 657.27p.
Most oil companies operating in the storm-prone region have been severely affected by this year's hurricanes. ConocoPhillips, the US oil major, said on Monday that it was losing about 20,000 barrels of oil equivalent production a day because of the storms. Royal Dutch Shell has suffered extensive damage at its Mars platform, while Chevron's Typhoon platform is floating upside-down.
For BP, the storm damage comes after a series of misfortunes hurt its bottom line. The company said on Tuesday that repairs to its flagship Thunder Horse oil platform in the Gulf of Mexico, which was left listing in the water after a storm in July, would cost it $100m.
The mishap has delayed the start-up of production from the platform, which had been due to begin pumping 250,000 barrels of oil a day and 200m cubic feet of natural gas by the end of the year. BP is also losing a further 160,000 barrels a day of production from the North Sea this quarter due to planned maintenance. It has also previously taken a $700m charge to compensate victims of an explosion in March at its Texas City refinery, which killed 15 workers and injured more than 170. The US government imposed a record $21.3m fine on BP for “egregious” health and safety violations. The company agreed to make sweeping changes to procedures.
