BP, Europe's second largest listed international energy group, yesterday significantly scaled back its growth expectations after a year of struggling to complete new projects on time and stem the natural decline of its older fields.

The company said it hoped to produce four million barrels a day of oil by 2009 and 4.3 million by 2012 - a decrease in growth expectations of approximately 12.5 per cent.

Nevertheless, it increased its capital expenditure target to $18 billion in 2007 from $16.9 billion last year to offset higher industry costs, such as taxes, contractor fees and rig rental payments.

The news that growth will not match previous expectations is the latest blow for the company which has also been hit by a series of safety failings.

Problems at its refineries in the US, its rigs in the Gulf of Mexico and its pipelines in Alaska have forced BP to invest in fixing ageing infrastructure. The US problems forced Lord Browne last month to announce his early retirement after 11 years in as chief executive.

BP also announced yesterday that its 2006 profits rose 15 per cent from the year before.

But its fourth-quarter profits fell 12 per cent. - ( Financial Times service)