Beset by safety problems and still recovering from last year’s Gulf of Mexico storms, BP plc reported in an interim update Wednesday that its 3Q2006 oil and natural gas production year-over-year will be flat and will fall sequentially from 2Q2006 to 3.8 million boe/d from 4.01 million boe/d.

In February, BP forecast production this year would average between 4.1-4.2 million boe/d. However, the forecast preceded the shutdown of BP’s Prudhoe Bay operations in Alaska, which also lowered the production forecast for partner ConocoPhillips (see Daily GPI, Oct. 4). In July, BP also reported production losses at its Venezuela operations, and it said it was still recovering from last year’s hurricanes (see Daily GPI, July 7).

BP reported its Gas Power & Renewables earnings in the quarter also are expected to be sequentially lower because of “significantly weaker gas and power trading margins in North America.” BP’s Henry Hub natural gas price was $6.58/MMBtu in 3Q2006, down sequentially from 2Q2006’s $6.80/MMBtu, and well below the $8.53/MMBtu in 3Q2005.

BP expects to record a 3Q2006 pretax gain of about $2 billion for aggregate nonoperating items, which will primarily reflect gains on upstream asset sales. Total consolidated interest charges are estimated at around $100 million for the quarter.

In related news, BP executives and the board of directors are being sued in Superior Court in Anchorage for allegedly breaching their fiduciary duties in running U.S. operations. The 100-page lawsuit, which was filed on Monday, contends the executives and board members were negligent in their oversight of pipelines in the Prudhoe Bay, AK field, refinery operations in Texas City, TX, in which 15 people were killed, and in an alleged price-fixing scheme in the propane market.

The Commodity Futures Trading Commission filed a civil enforcement action against BP Products North America in June for allegedly cornering the propane market in February 2004 to drive up prices (see Daily GPI, June 29). Federal investigators also are investigating whether BP manipulated crude oil and unleaded gasoline markets in 2002, 2003 and 2004 (see Daily GPI, Aug. 30).

According to the lawsuit, BP presented itself as “an exceptionally progressive, highly ethical and environmentally sensitive corporation, which stressed safety in its operations.” However, “the true facts were quite different than these corporate fiduciaries presented to BP’s owners — its shareholders.” The lawsuit said, “Unfortunately, BP has a long and sordid history of environmental law violations its executives now try to camouflage with a little green and yellow sunburst,” a reference to BP’s company logo.

The lawsuit, filed by Unite Here National Retirement Fund, is seeking unspecified damages. The fund holds 6,000 BP negotiable certificates.

BP is scheduled to announce its quarterly results on Oct. 24.

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