BP yesterday unveiled record first- half profits of $10.47 billion (£5.99 billion) as the UK energy giant continued to benefit from rising oil prices.

The figure, which is 29 per cent higher than a year earlier, includes a surplus of $4.98 billion (£2.85 billion) for the second quarter - lower than the $ 5.49 billion (£3.14 billion) achieved in the first three months of the year.

BP's profits haul was achieved after the cost of Brent crude averaged $51.63 a barrel in the three months to the end of June, compared with $38.27 during the whole of 2004.

Despite the assistance from oil prices, chief executive Lord Browne said "significant investments made over the last decade" had helped the company to make the most of the strong trading environment.

The half-year performance, which saw BP - the world's second largest oil company by market capitalisation - generate profits at the rate of almost £1.4 million an hour, is likely to be matched by rival Shell later this week.

The latest bonanza comes after BP notched record figures of £8.7 billion for 2004 - following a rise in Brent crude prices and stronger refining margins because of demand from emerging economies such as China.

Refining margins remained strong, although BP said its customer-facing marketing division continued to suffer as pump prices failed to keep up with the increase in oil costs.

The second-quarter figure would have been a record without one- off costs of $826 million (£472.8 million), mainly from compensation claims relating to an explosion at a BP's refinery in Texas City, Texas, which killed 15 workers and injured 170 more.

BP took a $700 million charge for fatality and personal injury compensation claims associated with the Texas City blast, which BP blamed on junior employees but which labour unions blamed on the design of the isomerisation unit involved and procedural errors.

The company's exploration and production division was the main beneficiary of the rising oil price as profits for the quarter rose 38 per cent on a year earlier to $5.9 billion (£3.38 billion).

Production was 3.5 per cent higher than a year earlier, reflecting the benefits of the company's TNK-BP joint venture in Russia and new exploration centres in areas such as Azerbaijan and the Gulf of Mexico.

Commenting on the record results, Lord Browne said: "Our underlying profits have

gone up by 42 per cent and the oil price has gone up by an equivalent amount.

"But gas prices were much weaker, by 11 per cent only, refining margins by nine per cent. So it's a mixed story."

On the outlook for oil prices, he added: "We continue to say that oil prices in the medium term will be pretty strong. Whether they stay at this level remains to be seen because of the lack of production capacity and the lag, the time it takes to get that production ready for the market."

Lord Browne, speaking on BBC Radio 4's Today programme, said it was difficult to tell whether prices would remain above $50 a barrel for the foreseeable future.

"We have said they will probably average around $40, but impossible to be very precise over the next few years."

He acknowledged that oil companies were making "strong profits".

But he said: "I remind people that these profits are distributed through dividends and stock buy-backs to our owners who are primarily pension funds, which is everybody."

UK petrol prices were the most competitive in Europe, he said, adding: "We pass on the cost of goods to the consumer but there is tremendous competition and, of course, everything is magnified by the fact that most of the petrol price is tax taken by the Government."

Graham Tran of Amicus said: "It's incredible to consider that a company earning £6 billion in profit in just six months are paying their offshore workers so little that they are finding it almost impossible to recruit and retain workers in the North Sea.

" BP must make huge improvements to their remuneration packages if they are to tackle the problem."

BP shares closed down 13p at 629.5p