BP - formerly known as British Petroleum - cited rising oil and gas production from new upstream products as well as increased processing of heavy crude at the Whiting refinery in the US as the main reasons for the substantial rise in profits in the second quarter.

Underlying replacement cost profit, which strips out the effect of very volatile oil prices to give a clearer picture of a company's earnings, rose by 34 percent to just over $3.6 billion (2.7 billion euros).

UK-based BP also said the US sanctions imposed on Russia had not yet had an effect on business, but that "any future erosion of our relationship with Rosneft, or the impact of further economic sanctions could adversely impact our business and strategic objectives in Russia, the level of our income, production and reserves, our investment in Rosneft and our reputation," according to a statement released on Tuesday.

BP owns a near 20-percent share in Russia's partly state-owned oil and gas giant Rosneft and is by far the biggest investor in the oil sector in Russia.

BP said the follow-up costs for the Deepwater Horizon disaster in 2010 would amount to $43 billion.

BP told investors it would pay a higher dividend of 9.75 cents a share for the quarter ended June 30, compared with 9 cents a year earlier.

ng/hg (Reuters, dpa, AFP)