BP outguns Shell with share buybacks pledge

BP, Britain's biggest company, yesterday reported an 81% surge in first-half profits to $6.8bn (£4.2bn) and tried to steal a march on arch-rival Shell by promising investors that share buybacks would continue.

The results were mainly driven by higher oil prices triggered by the war in Iraq.

Chief executive Lord Browne described the $3.1bn first- quarter, pro forma figure as a "another strong result", putting the company on track to meet all its goals.

The man who has just been voted by Fortune magazine as the most powerful businessman outside America stressed that the rewards for investors 48 hours after Shell reported similarly strong results but called a halt to its buyback programme.

Lord Browne declined to put a figure on his planned level of buybacks, saying this would depend on the way trading conditions - particularly oil and gas prices - developed.

Analysts said the scope to take such action was very small given its decision to pump large amounts of money into removing the pension deficit.

The oil company is committed to injecting up to $2.2bn into its pension fund to tackle a black hole in its retirement fund.

Lord Browne believed it was a "prudent and disciplined use of cash" to boost the retirement fund, adding that it was not a huge amount of money compared with the sums needed by some other firms.

The BP deficit- mainly concentrated in the US - has been caused by the downturn in equity values, lower interest rates, and stronger demand for immediate pension payments as a result of high redundancies following the takeover of Amoco and Arco.

A $6bn programme of asset sales helped trigger a slump in production of 5% in the second quarter but output would be boosted by the takeover of TNK, BP said.

The company has won European commission approval for the takeover and expects the green light soon from Russia and Ukraine.

Lord Browne dismissed suggestions the Kremlin might target TNK officials for investigations in the way it had those at Yukos and said he was not aware that the use of the British Virgin Islands as a base for TNK BP was a cause of concern to President Putin.