LONDON (Oct 13): BP estimated on Tuesday that its refining margins jumped nearly 60% in the third quarter as the Iran war boosts profits for oil majors, but also flagged US$3 billion to US$4.5 billion in impairments relating to its gas and low-carbon energy segment.

This is the second time in a year that the British firm has booked large write-downs in its low-carbon business after writing down over US$4 billion related to its solar, biogas and offshore wind businesses as the main reasons.

The group declined to provide details of the latest impairments.

BP estimated its refining indicator margin for the July-September quarter at US$46.7 per barrel, up from US$29.6 per barrel in the second quarter and US$15.8 per barrel a year ago. The Iran war has disrupted global oil supplies, driving up prices and oil majors' margins.

A boost to refining margins will lift BP's profit in the products segments by US$1.9 billion to US$2.1 billion compared with the previous quarter, the group said in a trading statement ahead of results due on Oct 30.

BP in recent years has changed its methodology for calculating refining margins, making historic comparisons difficult. Rival Shell said last week that it expected its third-quarter refining margin to jump to US$42 a barrel, a record high and sharply above US$24 a barrel in the previous quarter.

BP expects its third-quarter gas marketing and trading result to significantly exceed that from the previous quarter. The oil trading result is expected to be broadly flat compared with the second quarter, in what has been a strong year in trading for its oil desk.

Helped by a pause in its buyback programme this year, high prices and asset sales, BP expects its net debt to stand at between US$13.5 billion and US$14.4 billion in the third quarter, hitting its target of between US$14 billion to US$18 billion about a year early.

Together with hybrid bonds, leases and its Deepwater Horizon oil spill liabilities, BP estimated its overall obligations at between US$43.6 billion and US$44.6 billion in the third quarter, down from US$53.6 billion in the previous three months. This does not include its US$6 billion sale of a stake in its Castrol lubricants business.

BP put its upstream production at 2.19 million to 2.24 million barrels of oil equivalent per day, compared with 2.2 million in the previous quarter.

The firm will provide a strategy and outlook update on Dec 15 in New York, which will "set out the next phase of delivering a simpler, stronger and more valuable BP," a spokesperson said.

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