BP's second-quarter results reflected another period of lower year-over-year earnings, caused primarily by lower oil and gas prices, but signs of improvement from the first quarter began to appear. Second-quarter earnings were cut in half to US$3.1 billion from US$6.7 billion a year ago. However, we were encouraged by improving sequential results as each of BP's business segments reported higher earnings than in the first quarter. We applaud BP's efforts to keep capital spending low and debt/capitalisation steady at 22%, down from 23% in the first quarter.
The upstream operations showed improvement, as oil and gas production was actually 4% higher in the second quarter over year-ago levels thanks to startups of major projects including Dorado and King South in the US Gulf of Mexico, TNK-BP's Urna and Ust-Tegus fields in Russia, and the first liquefied natural gas cargo lifted from the Tangguh LNG project in Indonesia. Realised oil and gas prices that were 11% higher helped the firm post higher sequential exploration and production earnings. We look for major projects to continue to drive BP's production growth; new ventures in Iraq, new blocks in Egypt, and recent discoveries at Oberon field in offshore Angola and Mad Dog field in the US Gulf of Mexico will all contribute to longer-term production growth.
We're pleased to see efforts to improve downstream operations beginning to bear fruit, as lower costs and operating performance gains led to a year-over-year earnings increase in that segment. This helped to offset weak refining margins that are continuing into the third quarter. Operating improvements at BP's Texas City refinery helped to keep refining throughput levels just above year-ago levels. However, we believe market factors remain challenging for the rest of 2009 and possibly into 2010 because of weakened global demand for refined products and rising excess inventories.
