ExxonMobil shrugged off the impact of lower oil prices and boosted its profits in the first quarter of the year with a strong performance from its refining and chemical businesses.

The American oil group showed a clean pair of heels to BP, its British rival, by declaring profits of $9.28 billion (£4.66 billion) for the first three months of 2007, up by 10 per cent on the previous year.

On Tuesday, BP revealed a 17 per cent fall in profits to $4.36 billion, blaming weak oil prices, lower oil and gas volumes and rising costs.

On Wall Street, ExxonMobil shares were almost unchanged yesterday despite its better than expected earnings. The US multinational’s share price has been in steady upward momentum, strongly out-performing BP over the past four years. ExxonMobil’s market capitalisation, currently $451 billion, is more than twice BP’s $219 billion. The American company is now bigger than the economy of Pakistan, adjusted for purchasing power, and is closing fast on the Netherlands.

Upstream, Exxon suffered from a weaker oil price and lower natural gas sales in Europe, which led to an overall decline of 3 per cent in Exxon’s quarterly hydrocarbon output. Average crude prices were $58 a barrel in the first quarter, some $5 a barrel lower than in the previous year. Exxon’s earnings in the first quarter were just over $6 billion, a decline of $342 million from the same period in 2006.

However, the US oil major more than made up the difference in its downstream business, whose profits rose by $641 million to $1.9 billion. Earnings from petrochemicals also improved, up $287 million to $1.2 billion in the first quarter.

Rex Tillerson, Exxon’s chief executive, attributed the gains to better margins in refining, marketing and chemicals, which had offset the effect of a weaker crude oil price.

Exxon’s performance contrasts with BP’s problems in the first quarter, when it failed to exploit the better margins from manufacturing road fuels, mainly because of the continued loss of production at the Texas City refinery, which remained partially closed after the fire in 2005. The British oil company also disclosed this week that Whiting, another US refinery, would remain shut for months for maintenance.

Jon Rigby, an oil analyst for UBS, said that Exxon was widely recognised for its superior downstream operations and was demonstrating the benefits of running a large-scale refining business integrated with its chemical operations.

Exxon paid investors $8.8 billion in the first quarter – $1.8 billion in dividends and $7 billion in share buybacks. It invested $4.3 billion in the business.

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