BP PLC (BP) said Tuesday its profit from the Russian joint-venture TNK-BP (TNBP.RS) for the first quarter jumped almost fivefold, despite lower oil production.
BP, which owns 50% in the Russian-British oil major, said that profit attributable to itself as a shareholder was $744 million in the quarter, up from $162 million for the same period of 2007.
BP said the joint venture's profit growth was due to higher oil prices and to the effect of lagged tax reference price.
In the first quarter last year oil prices were at a record low, which had a negative impact on TNK-BP's earnings. However, the export duty was based on the higher oil price dating two months back, Konstantin Reznikov, an analyst at Dresdner Kleinwort said.
"So 1Q07 was very weak for all Russian oil companies, especially for TNK-BP. But this year it's visa versa, as the export duty in 1Q08 was based on a cheaper oil price in the previous quarter, leading to a sharp increase in profit," he said, concluding that BP's income from TNK-BP is quite volatile
BP said its dividend from the joint venture would be $1.2 billion in the first quarter.
BP's share of the joint-venture oil production was 818,000 barrels per day, down 1.7% from 832,000 bpd in the first quarter of 2007 and down form 829,000 bpd in the fourth quarter of the same year.