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BP's NZ profit climbs 65% to $243M in 2017 as govt scrutinises fuel industry pricing

Friday 1st June 2018

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The New Zealand division of British Petroleum, one of the world's largest oil and gas companies, which was criticised last month after a leaked email revealed its pricing tactics and prompted government action, lifted annual profit 65 percent to $243 million.

BP New Zealand's revenue rose 18 percent in the year ended Dec. 31, 2017 to $3.22 billion, with net profit rising to $242.9 million from $147.5 million in 2016. It paid a $400 million dividend to its UK-based parent company.

The fuel industry came under fire in May after a leaked internal email - which showed BP increased prices in various stations across the North Island with hopes competitors would follow suit as it was making losses in Ōtaki - prompted Energy Minister Megan Woods to call BP in to explain. Following that meeting, Woods said BP's actions had been cynical, the issue was probably industry-wide, and she wasn't convinced New Zealanders were getting a fair deal.

The industry was already being scrutinised after an independent report released last July found New Zealand's petrol market may not be competitive, with retail margins increasing over the past five years while more expensive petrol in the South Island and Wellington aren't explained by higher costs in those areas.

The Commerce Amendment Bill, currently in front of select committee with submissions closing on June 15, would allow the Commerce Commission to compel petrol companies to provide information on their pricing.

In calendar 2017, BP sold more than half of its holding in the nation's only oil refinery operator, NZ Refining. It sold 34.7 million shares, or 11.1 percent of the company, reducing its holding to 10.1 percent, at a price of $2.30 per share. That sale reaped it $79.9 million, and minus the carrying amount of the investment BP generated a $6.5 million gain, its accounts show.

BP also sold shares in associate company McFall Fuels, and subsidiary Rural Fuels, to its new joint venture RMF Holdings. It reported a $4.9 million gain from the sale of the McFall Fuels shares and an $839,000 loss from Rural Fuels.

The New Zealand entity paid $85.8 million in income tax in 2017, up from $67.5 million a year earlier.

BP's London-listed shares recently traded at 5.763 British pounds and have gained 24 percent this year

(BusinessDesk)

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