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02 Feb 2021 | 07:01

BP profits slump as pandemic batters energy demand

(Sharecast News) - Fourth quarter profits at oil giant BP fell to a worse-than-expected $115m as the coronavirus epidemic battered energy demand. Annual losses came in at $5.7bn after the company wrote down the value of oil and gas assets by $6.5bn in response to lower long-term energy price forecasts.

They compared with a $10bn profit in 2019 and were driven by lower oil and gas prices, significant exploration write-offs and refining margins and depressed demand.

Underlying fourth quarter replacement cost profit, used by BP as a measure of net income, reached $115m against a $86m profit in the previous three months, and a profit of $2.6bn.

Looking forward, BP said it expected "material impacts in downstream as a result of the pandemic, with increased COVID-19 restrictions resulting in lower product demand".

"We expect industry refining margins and utilization to remain under pressure. In our marketing businesses we expect renewed Covid-19 restrictions to have a greater impact on product demand, with January retail volumes down by around 20% year on year, compared with a decline of 11% in the fourth quarter."
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