British Petroleum (BP) and Royal Dutch Shell, two of the largest international oil majors, have announced a boost in first quarter profits, reflecting on increased oil and gas prices.

BP the London based oil major, reported a profit of $7.6bn compared to $4.4bn in the first-quarter of 2007.

It beat forecasts on Tuesday with a 48 per cent replacement cost (RC) net income, helped by record global oil prices and strong profits from energy markets.

 

 

BP reported its RC at $6.49bn, a value which is often viewed as the most important parameter of an oil company's performance.

 

It excluded changes in the value of crude inventories and measured only the amount that would cost to replace assets at current prices.

 

BP said production averaged 3.913 million barrels of oil equivalent per day in the first three months of the year, in line with forecasts.

 

According to the company, the total output would have risen 5 per cent, had it not been for the production sharing contracts it has with resource-holders.

 

The contracts reduced the amount of oil BP received from projects when oil prices increased.

 

BP announced a profit in the first quarter, despite lower crude processing margins and throughputs at its refineries.

 

However, a BP spokesman said that the strong first-quarter earnings did not necessarily represent BP's return to form.

 

"All the trading activity has gone in our favour in this quarter. This has probably contributed $400m above a typical result," the spokesman said.

 

The spokesman added that a deferral of tax charges in Russia boosted the bottom line by around $200m, while corporate overheads that dipped by $250m this year, added to the profit.

 

 

Meanwhile, Hague-based Royal Dutch Shell also declared a 25 per cent rise in its first-quarter earnings on Tuesday.

 

Shell, Europe's largest oil company, attributed the first-quarter performance to strong increases in energy prices.

 

The company said its average selling price of crude oil leaped by 66 per cent to more than $90 per barrel from the first quarter a year ago.

 

This led to profits soaring to a record $9.08bn, up from $7.28 bn recorded last year.

 

Total sales were up 55 per cent to $114 bn.

 

The company said production averaged 3.52 million barrels of oil equivalent per day in the first three months of the year, compared with 3.51 million in the same period last year.

 

Jeroen van der Veer, chief executive of Shell, said that the strong numbers were due to "good operating performance, coupled with increased oil and gas prices".

 

Jason Kenney, an analyst, said: "They look like blow-away numbers. Surprising across all divisions at this time."

 

"I can't see anything in particular that is unusual, they've just done well," Kenney said.

 

Shell and other oil companies are benefiting from surging oil prices, which topped $100 a barrel in January and have since climbed towards $120.