BP sees profits rise but warns of Russia sanctions risk

BP has warned that further sanctions against Russia could affect its business as it posted a rise in second quarter profits.

BP said that sanctions imposed over the Ukraine crisis have not affected the oil giant so far, but could do so in the future.

The warning came as European ministers were meeting to discuss bolstered measures against Russia.

Sanctions "could adversely impact our business", BP said.

BP has around a 20% stake in Russian energy giant Rosneft.

"Any future erosion of our relationship with Rosneft, or the impact of further economic sanctions, could adversely impact our business and strategic objectives in Russia, the level of our income, production and reserves, our investment in Rosneft and our reputation," BP said.

'Cloud on the horizon'

The company's second quarter replacement cost profits, which strip out volatility in oil prices, were $3.2bn (£1.9bn), up from $2.4bn in the same period last year.

"I think in the short term they'll be looking in particular at the effect [sanctions are] going to have on technology transfer to Russia," said Russian oil economy expert John Lough.

"But I think, more broadly, this is of course a cloud on the horizon for BP, because the crisis in Ukraine seems to be escalating rather than de-escalating," he told the BBC.

European ministers are meeting in Brussels on Tuesday to discuss whether to impose further sanctions on Russia over allegations of its involvement in the ongoing crisis in Ukraine.

Tensions have been heightened by the downing of Malaysia Airlines flight MH17, which the UK believes was shot down by a missile "supplied by the Russians".

Ukraine and pro-Russian rebels have each accused the other of shooting down the Boeing 777, killing 298 passengers.

Mr Lough said sanctions could be "ramped up", and were likely to have an effect on the Russian economy.

Bolstered European sanctions could include the prohibition of exports of technologies used in the Russian oil sector.

For the second quarter, BP said higher oil production in higher-margin areas such as the Gulf of Mexico had boosted its profits.

BP expects third quarter production to be lower than the second quarter due to "planned major turnaround and seasonal maintenance activities in Alaska and the Gulf of Mexico".