BP reports big drop in profits

Oil giant BP has reported a big drop in profits due to refining losses, service station write-downs and rising costs.

The third-largest Western oil company by market capitalisation said today that full-year replacement-cost profits fell 22 per cent to $17.29 billion, despite a big rise in crude prices.

Fourth-quarter replacement-cost profit, which strips out unrealised gains on fuel inventories, fell 24 per cent to $2.97 billion.

Underlying profits fell below analysts' forecast range.

However higher production, planned cost cuts and a more generous dividend policy helped push BP shares higher.