BP missed analysts' forecasts with a 24 per cent drop in fourth-quarter replacement cost net profit to €2 billion, due to a collapse in oil prices and a big loss at its Russian unit.

Chief executive officer Tony Hayward said oil was responding to weaker crude prices by intensifying his efforts to cut costs and jobs, echoing similar comments rival Royal Dutch Shell made to staff last week.

"The mantra in BP today is: "Every dollar counts, every seat counts'," the CEO said in a statement, adding BP would exceed its target of cutting 5,000 job by the middle of the year.

"BP's Q4 results were fairly uninspiring," Richard Griffith, oil analyst at Evolution Securities said in a research note.

BP's full year replacement cost profit, which strips out unrealised gains or losses related to changes in the value of inventories, was €20 billion, up 39 per cent compared to 2007. Oil prices plunged in the fourth quarter but the ramp-up to a peak above $147/barrel in July ensured record annual results for Europe's second-largest listed oil company by market value.

The results include a loss of €546 million from the company's Russian venture TNK-BP, related to the effect of lagged tax charges, lower oil prices and asset impairment charges.

Oil and gas production rose one per cent in the quarter compared to the same period in 2007, up to 3.945 million barrels of oil equivalent per day (boepd).

Full-year output rose to 3.84 million boepd from 3.82 million in 2007, after two years of falling production.

BP expects to hold investments in drilling and project development steady this year, Mr Hayward said, following the trend among the very largest oil companies, which contrasts with big spending cuts across the rest of the sector.