LONDON: BP increased its dividend and ramped up share buybacks after second-quarter profit rose to $2.8 billion, joining rivals in boosting shareholder returns on the back of higher oil prices and a global recovery from the coronavirus pandemic.

       The surge in cash put wind in the sails of chief executive Bernard Looney's one-year-old plan to shift the company away from oil and gas to renewable and low-carbon energy in an effort to battle climate change.

       Rivals including Royal Dutch Shell, TotalEnergies and Chevron also boosted shareholder returns last week in a sign of the sector's recovery from a bruising year that saw energy demand plummet due to the pandemic.

       BP increased its dividend by 4% to 5.46 cents after it was halved to 5.25 cents in July 2020 for the first time in a decade in the wake of the pandemic slump.

       BP also plans to repurchase $1.4 billion in the coming months after generating surplus cash of $2.4 billion in the first half of the year, it said.

       In April, BP launched a $500 million buyback plan to offset dilution from an employee share distribution programme.

       Looney said in a statement that the measures were possible due to a stronger performance of the business as well as "an improving outlook".

       BP said it expects global oil demand to recover to pre-pandemic levels sometime in the second half of 2022.

       BP's underlying replacement cost profit, the company's definition of net earnings, reached $2.8 billion in the second quarter, compared with analysts' expectations for a $2.15 billion profit.

       That compares with $2.63 billion in profit in the first quarter of the year and a loss of $6.68 billion a year earlier when it took large non-cash charges.

       BP said it has increased its price forecast for benchmark Brent crude oil to 2030 to reflect expected supply constraints, while also lowering its longer-term price forecast because it expects an acceleration in the transition to renewable energy.

       As a result, the company increased the pre-tax value of its assets by $3 billion. That comes after BP wrote down over $17 billion last year after lowering its price expectations.

       The company said at oil price of $60 a barrel, it expects to be able to buy $1 billion in shares and boost its dividend annually by 4% through 2025.

       Brent oil prices rose in the second quarter to an average of $69 a barrel from $61 in the previous quarter and $29.56 a barrel in the second quarter of 2020. - Reuters