BP profits fall sharply after it cuts asset values

Oil giant BP has reported a sharp fall in profits in the second quarter of the year after it had to cut the value of a number of its key assets.

The company made a replacement cost profit - which strips out the effect of oil price movements - of $238m (£151m) in the April to June quarter.

This compares with a profit of $5.4bn a year earlier.

BP said it had to cut the value of its US shale gas assets and a number of its refineries.

It said its profits were also reduced by the decision to suspend its Liberty offshore oil project in Alaska.

The company also said it hit by weaker global oil prices and the reduced price of natural gas in the US.

In addition, it said that planned maintenance had cut production in the Gulf of Mexico, and that it had seen reduced income from its Russian joint venture TNK-BP.

BP chief executive Bob Dudley said: "We recognise this was a weak earnings quarter, driven by a combination of factors affecting both the sector and BP specifically."

The company announced last month that it is to sell its 50% stake in TNK-BP. The move comes after it has endured a strained relationship with TNK-BP's other joint owner, Alfa-Access-Renova (AAR), a group of Russian billionaires.

Last year, BP had hoped to form a joint venture with Russia's largest oil firm, Rosneft, but this was abandoned after AAR launched a successful legal challenge.

A week ago, a Russian court ordered BP to pay $3.1bn in damages to AAR over the Rosneft affair. BP has said it will appeal.

In 2010, a BP oil rig exploded in the Gulf of Mexico, killing 11 workers and leaking four million barrels of oil. The company has now paid out a total of $38bn dollars in compensation.