London’s Sunday Times says experts are betting BP will break the UK record for annual profits, currently held by Shell, and will close in on the world record held by ExxonMobil, by announcing a pre-tax profit of more than £13.5 billion (approximately A$32.5 billion).
The profits, which have risen by almost 50% compared with 2003, will trigger a pay and bonus package worth an estimated £5m for BP boss Lord Browne who was given a life peerage by British Prime Minister Tony Blair in 2001.
BP has drawn up plans to pay its top executives even higher pay packages over the next few years as it seeks to rival the higher pay packages traditionally offered by US firms.
BP’s record profits, equivalent to £37m per day, are expected to stoke a backlash from consumers, trade unions and MPs after Shell last week announced that it had also enjoyed a record year in 2004, even though the company is still in turmoil over its fifth reserves downgrade in little over a year.
BP has developed a different method of calculating profits that allows the firm to announce a lower level of profits — of about £8.2 billion — to dampen criticism. But the pre-tax profit figure of more than £13.5 billion is the standard measure used in the City and watched by stockmarket experts. Browne was forced to admit in a recent interview that the amount of cash being generated by BP was “staggering”.
Last week Martin O’Neill, chairman of the Commons trade and industry select committee, said the government should consider imposing a windfall tax on oil companies and Shell and BP’s involvement in the gas market is also under scrutiny.
The BP announcement will be welcomed in the City where the company is admired for its long-term plans to cope with the problem of dwindling North Sea oil supplies.
