A new year, a new board, a new leaf

14 January 2003

Rising exploration costs mean that oil firms can no longer chase profitability and production growth at the same time. So if profitability is back in vogue, then production can give. Oil majors are long overdue a restructuring of their tail end assets.

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BP, Europe's second largest oil company, said on Tuesday that it had increased oil and natural gas production by 3% in 2002, in line with reduced forecasts late last year. The company had originally forecast a 5.5% increase.

The trading update came a day after BP said it had sold its ageing North Sea Forties oil field to US independent Apache as part of a $1.3bn deal. BP is currently reviewing all its assets after it slashed production forecasts.

BP also said that the profitability of its refining unit, the second biggest division after pumping oil and gas, declined compared with the third quarter.

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