The company said that asset sales, a mild winter and natural field declines offset the impact of new start-ups in Azerbaijan and North Africa.

The oil giant was also hit by the temporary closure of facilities at Prudhoe Bay in Alaska after a devastating pipeline leak in March, and delays to the opening of the Thunder Horse and Atlantis platforms in the Gulf of Mexico.

A production forecast of 3.82 million barrels of oil equivalent per day (boepd) for the fourth-quarter period to the end of December is well below the 4.02 million boepd in the same quarter of 2005, but a slight rise on the third quarter’s 3.816 boepd. This gain stems a five-quarter decline.

Analysts had predicted fourth-quarter output close to the 2005 figure, at around 4 million boepd.

BP said that refining margins, an indicator of the profitability of the firm's refineries, fell 17 per cent to $6.30 per barrel.

However, the company predicted a tax rate for the quarter at around 25 per cent, against 33 per cent in 2005.

Shares in BP dropped 8.3 per cent in 2006, compared with a 0.8 per cent rise at Royal Dutch Shell.

The shares were down 2.5 per cent or 14p to 538½p in mid-morning trading.

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