PROFITS at energy giant BP fell 18% last year as it continued to count the cost of the fatal Gulf of Mexico oil platform explosion in 2010.

Underlying replacement cost profits at the group were £11.2bn in the year to December 31 after BP said the cumulative cost of the incident had reached £27bn.

It still needs to settle the bill for civil claims but warned it would only be on “reasonable terms”, with the trial scheduled to start later this month.

Profits in its fourth quarter fell by a less-than-expected 20% to £2.5bn, despite the group being hit with the biggest fine in US history after agreeing a £2.9bn penalty with authorities, which it will pay in instalments over five years.

BP said it is still assessing the impact of the terrorist attack at its joint venture in the In Amenas gas site in Algeria last month, but added it is committed to the country, where it has operated for 60 years. It intends to resume production when it is safe.

BP said it had reached its target to raise £24bn from the sale of assets since the beginning of 2010 a year early. It made £4.3bn from sell-offs in the fourth quarter, excluding its 50% interest in the Russian TNK-BP venture to Rosneft.

In November it sold a range of North Sea oil fields to Taqa, the Abu Dhabi National Energy Company, in a £687m deal.

But the sell-offs pushed production in its upstream business 7.1% lower and the group said it will also be lower in 2013, although its expects major projects in Angola, Australia, the Gulf of Mexico and Azerbaijan to come on stream.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said that while BP had made much progress during the full year, it is still “far from being out of the woods”.

He said: “Despite having disposed of $38bn of assets to cover the known costs of the Macondo spill, the spectre of the impending trial casts a long shadow on prospects.”

But Sam Wahab, analyst at Seymour Pierce, said: “Following a difficult period for the company, we are beginning to see a resolution to BP’s various legal issues following Macondo.

“Investors may believe that this places the company in a robust financial position ahead of a significant year of upstream activity.”