BP said hydrocarbon production growth for the third quarter is expected to be around 5% — lower than previously projected due to “operational problems” during the month of August associated with some of the company’s assets. BP provided an update of the outlook statement in its half-year results contained in its 6-K filing last week with the U.S. Securities and Exchange Commission.

The update includes developments since BP’s results were published on July 30 and also has revised comments on production, U.S. gas prices, refining margins and capital expenditures. Despite recent financial market weakness that poses a downside risk to a positive economical outlook, BP noted that the world economy continued to recover during the second quarter with further growth expected in the third quarter. BP said its overall trading environment improved to around “mid-cycle” during the second quarter, but was below this level on average for the first half of the year.

On production, the update said the operational problems were associated with the company’s Schiehallion offshore loading vessel and the Interconnector gas pipeline in the United Kingdom, shut-in wells in Alaska and gas export problems in North America due to constraints on third-party pipelines and processing plants.

“Because of these operational problems and their impact on the fourth quarter, full-year hydrocarbon production growth for 2002 is expected to be in the range of 4.5 to 5%,” BP said. “New projects [that will] contribute to production in the second half of the year include King and Trinidad LNG train 2 (already in production), and [the] King’s Peak, Horn Mountain and Princess [projects] in the Gulf of Mexico.” Despite the fall-off in production, the company said its medium-term production target of 5.5% compound annual growth, averaged over the period 2000 to 2005, remains unchanged.

The update noted that U.S. natural gas prices “firmed in the second half of August in the face of stronger crude prices and high late-summer temperatures, and despite high levels of gas in storage. Third-quarter average realizations are still expected to be somewhat lower than in the second quarter following low prices in July and early August.”

BP said that capital expenditure is on track for the upper end of the year’s target range at around $13 billion, excluding acquisitions. The company added that net debt ratio was below the mid-point of the 25-35% range at the end of the second quarter and is likely to remain relatively stable around that level.

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