BP is preparing to take a hit of almost $3bn (£2.3bn) in its results for April to June as lower demand for fuels leads to woes within the company’s oil refining business.
The oil supermajor warned investors that “significantly lower realised refining margins” could wipe between $500m and $700m from its earnings for the quarter.
It also expects to take a $2bn writedown resulting from a plan to scale back its refining operations at its Gelsenkirchen refinery in Germany by a third from next year in response to weaker demand.
The looming financial hit comes amid wider pressures facing the global refining business. The US oil company ExxonMobil warned investors this week that lower refining margins would have a negative impact on second-quarter profit of between $1.1bn and $1.5bn.
BP added that its oil trading business was “expected to be weak”, while gas trading was expected to be “average”. The update caused BP shares to drop by more than 3.5% to 457.76p a share on Tuesday morning.
On Monday it was reported that the company’s ousted former chief executive, Bernard Looney, had met senior figures in the United Arab Emirates in the hopes of securing private equity investment to fund a new oil venture.
Looney was sacked from the company last year for failing to disclose his relationships with colleagues to the board.
The Irishman had reportedly held talks with Sultan Al Jaber, the head of the Abu Dhabi National Oil Company, and with Sheikh Tahnoon bin Zayed al-Nahyan, the UAE’s powerful national security adviser and businessman, according to the Financial Times. Looney is not understood to be in talks with the UAE’s state oil company, Adnoc.
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The British oil and gas multinational Shell is also expected to take an impairment charge of up to $2bn in its next set of results after it was forced to halt work on Europe’s largest sustainable aviation fuel project in Rotterdam and sell off a Singapore refinery.
The company plans to pull back on investments through its low-carbon division in favour of investment in growing its gas business. It said on Tuesday that it would move ahead with plans to develop a gas field east of Trinidad and Tobago.
