BP has praised its cost reduction programme as the oil company reported a cost profit of $4.981 million, a better than expected figure, but 50 per cent below the same period last year.

"Two years ago we set out on a journey to re-establish BP's competitiveness and, despite the current environment, we are making good progress," BP group chief executive Tony Hayward said. He added that cash costs have been reduced by $2 billion when compared the same period last year. "We've surpassed the target we set at the beginning of the year...we're also continuing to drive efficiency at the corporate centre," he said.

BP has continued to standardise its IT and back office operations. Hayward announced that the Refining and Marketing Head Office has been "refocused" and that all back-office systems in Spain and Portugal have been implemented. "We are moving operations to the heart of BP and standardizing how BP operates around the world," he said. BP has reduced its head count globally by 5000 people.

In the third quarter of 2008 BP reported replacement cost profit of $10,029 million, but market watchers expected today's announcement from BP to be worse than it was. Hayward said demand for energy was stabalising after "significant falls in the first half of the year", but cautioned market optimism, "At this point we see little evidence of any growth in demand and expect the recovery to be long and drawn out."

BP recently signed major outsourcing contracts with TCS, Infosys, Wipro and IBM in India for application development and support. BP has a wide range of bespoke technology, which it has stated give it a competitive edge.