BP suffers steep decline in Q1 underlying profit

Global oil & gas giant BP suffered a steep decline of around 25 per cent in its underlying profit in the quarter ended March 31 as a huge write-off of the value of its American shale acreage weighed on its earnings.

BP reported an underlying profit of $3.2 billion for the January-March quarter of this year. The figure represents a decline of $1 billion from the corresponding quarter of the previous year.

The steep decline in underlying profits was partly due to a $521-million write-off related to the oil giant's Utica shale acreage in Ohio, the United States.

Despite paying $6.8 billion (£4 billion) in dividends to its shareholders last year, the company saw American shareholders keener on share buybacks. Investors are also concerned about the future of the company's potential partnership with Russian state-controlled oil firm Rosneft.

The United States has placed Igor Sechin, the president of Rosneft, on its list of Specially Designated Nationals. In simple words, he has been under sanctions.

Commenting on the situation, Prosperity Capital CEO Mattias Westman said, "With Sechin being sanctioned it may complicate relations for Rosneft with western companies."

Thus far BP has maintained that it is committed to its investment in Rosneft but if the United States fails to influence the situation in Ukraine, it may use BP as a scapegoat to divert attention from its inability and the oil giant will definitely have to bow to pressure to play the role of scapegoat.