LORD BROWNE of Madingley, the BP chief executive, yesterday claimed that Britain’s pension crisis would be substantially worse without the oil and gas giant’s financial contribution as he pledged to hand back up to $65 billion (£37 billion) to shareholders over the next three years.

Speaking after BP reported a full-year profit of $22.3 billion, a company record, Lord Browne pointed to the huge amount of cash being returned to shareholders that was helping to offset the UK’s pension crisis.

BP distributed $19 billion to shareholders last year, in the form of dividends and share buybacks. BP dividends make up 17 per cent of all income received by UK pension funds from FTSE companies.

Over the past three years BP has distributed $40 billion to shareholders and the company indicated that it could return $65 billion over the three years to 2008, assuming that oil prices remain at around $60 a barrel.

Brent crude futures in London settled at just below $62 a barrel yesterday. Lord Browne said he expected prices to stay above $40 a barrel in the medium term, which should result in at least $50 billion being distributed to BP shareholders over the next three years. Lord Browne said: “£1 out of every £6 that goes to UK pension funds in terms of dividends comes from BP. The profits of BP and other companies support pension funds that are not in a very good shape.”

The aggregate pension fund deficit of FTSE 100 companies soared from £75 billion to £110 billion last month after bond yields went into freefall. BP, however, is not affected. Its UK pension fund is about £760 million in surplus after the company heavily topped up the scheme in 2003.

Tony Woodley, the general secretary of the Transport and General Workers’ Union, said: “If there is any justice in this world, then a part of those excess profits should go towards helping those whose pensions have been robbed.” SimplySwitch.com, a consumer energy adviser, also criticised BP’s soaring profits “at a time when the number of households struggling to pay their energy bills is dramatically increasing and driving many into fuel poverty”.

Lord Browne said BP’s UK operation accounted for only 4 per cent of group profit. BP’s UK profits come mainly from exploration and production, with downstream activities such as retail contributing only negligible earnings.

Despite the modest profit contribution from UK operations, BP paid £1.25 billion into government coffers, including about £900 million in corporate tax.

Royal Dutch Shell, which reported a $22.9 billion (£13.1 billion) full-year profit last week, corporate Britain’s biggest, contributed £674 million towards Revenue & Customs coffers.

BP itself is experiencing oil-related cost pressures. Lord Browne said that a new costefficiency drive was designed to strip 10 per cent off BP’s marketing costs, to achieve annual savings of $500 million by 2008.

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