BP posts fall in profits after more Gulf disaster costs

The fire at the Deepwater Horizon oil rig The Deepwater Horizon disaster caused one of the worst oil spills in history

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Oil giant BP has posted a fall in full-year profits after setting aside money to cover liabilities for the Deepwater Horizon disaster.

Replacement cost profit, which strips out the effect of oil price movements, was $17.6bn (£11.18bn) in 2012 - down from $21.7bn a year earlier.

It comes days after a US court approved a record $4bn criminal fine against BP over the fatal Gulf of Mexico disaster.

BP made $4bn in the fourth quarter, against $5bn for the 2011 period.

Despite the profits fall, the figures beat analysts' expectations. BP said that its downstream activities - refining and sales of petroleum products - earned a record amount for the year. Its share price was up 2% in morning trading.

BP in October agreed to sell its 50% stake in TNK-BP to the Russian state-owned energy company Rosneft in return for cash and shares.

"We have moved past many milestones in 2012, repositioning BP through divestments and bringing on new projects. This lays a solid foundation for growth into the long term," said BP chief executive Bob Dudley.

But some analysts said they would remain sceptical about the company's outlook until all claims are settled.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers said in a research note: "BP made much progress during the full year, yet it is still far from being out of the woods."

The 2010 Deepwater Horizon incident was one of the worst environmental disasters in US history.

It killed 11 workers and released millions of barrels of crude into the Gulf of Mexico over 87 days.

BP said that it took an additional $4.1bn charge in the fourth quarter, related to its settlement agreement with the US Department of Justice, in which it agreed to plead guilty to 14 criminal charges.

In total the company believes the cumulative cost of the Gulf of Mexico spill at the end of 2012 amounted to $42.2bn.

BP will also pay an $525m to the Securities and Exchange Commission over a period of three years.

The UK group now faces a civil trial over the accident, scheduled to start 25 February in New Orleans, which could potentially cost billions of dollars more in civil penalties.

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