BP first quarter profits are lower than last year, after selling off production to help pay for the damages of the Gulf oil spill.

BP announced yesterday that its “replacement cost” profit had fallen from $5.6bn in the first quarter of 2010 to $5.4bn (£3.3bn) in 2011.

This is despite oil price being 31pc higher in 2011 than in 2010.

The first quarter results were hit by a $400m charge related to the spill, as well as lower production and the mounting costs for the clean-up in the Gulf.

It is expected that BP’s profits will continue to fall in quarter 2 of 2011.

BP also revealed yesterday that it hopes to resume drilling in the Gulf of Mexico later this year.

BP’s Chief financial officer Byron Grote said that the oil giant has applied for permits to return to drilling in the Gulf.

It is yet to be seen whether they will be granted permission as the decision could prove somewhat controversial following last years catastrophic spill.