* Dividend up 12.5 pct, second post-spill hike
* BP has bigger cash buffer to face spill costs
* Q3 beats forecast, boosted by refining margins
* World No.4 sees more upstream, ``oilier'' future after 2014
* Shares up 4.6 percent as firm kicks off big oil Q3 season
(Adds more analyst comment, updates shares,)
LONDON, Oct 30 (Reuters) - British oil group BP Plc raised its dividend on Tuesday, confident it can fight back from a devastating U.S. oil spill with a big pile of cash, a rejigged business in Russia and a focus on exploration and production.
BP has fallen to a distant fourth in the top tier of oil and gas companies since the 2010 Macondo well disaster due to fears over huge cleanup and compensation costs, as well as uncertainty over the future of its Russian operations.
The group has been shedding vast chunks of its business and has raised $35 billion, including $11 billion in the third quarter alone, to meet its obligations in the United States' worst ever offshore environmental catastrophe.
It will also get $12 billion as part of a deal announced last week to sell its stake in Russian venture TNK-BP and take a stake in state-controlled Rosneft.
Delivering third-quarter results, chief executive Bob Dudley said on Tuesday BP was ready, if necessary, for a court battle with U.S. authorities over oil spill costs, and hailed the new Russian strategy as a ``truly distinctive position in one of the world's largest and most important oil and gas provinces''.
He also outlined BP's plans beyond 2014 for the first time, with a focus on oil and exploration over fuel refining and gas, and lifted BP's dividend by 12.5 percent to 9 cents a share, the second hike since the spill interrupted payouts.
``Clearly the board is giving a signal of confidence regarding the medium term,'' said Societe Generale analyst Irene Himona, adding the dividend was a ``material positive surprise''.
BP said third-quarter underlying replacement cost profit fell to $5.2 billion from $5.5 billion a year ago. A shrinking business, lower production and lower crude prices took their toll, but were partly offset by strong refining margins and the company's highest availability of refinery capacity in years.
The result was ahead of analysts' expectations of around $4.1 billion, mainly because of the record refining result, and up from $3.7 billion in a weak second quarter.
``They're very strong numbers. They've successfully captured in Q3 refining margins, certainly within the U.S.,'' said Bernstein analyst Oswald Clint.
BP shares were up 4.6 percent at 444.6 pence in afternoon trade, outperforming Europe's STOXX oil and gas index. The stock is still down over 30 percent from levels before 2010, while the sector is down only 4 percent over the same period.
BP is in talks with the Department of Justice (DoJ) and other U.S. agencies regarding a final settlement for the 2010 oil spill, but despite reports during this year that an out-of-court deal was close, no such agreement has materialised.
``BP has repeatedly said that it is willing to settle on reasonable terms but otherwise continues to prepare vigorously for the start of trial,'' it said.
The trial is now scheduled for late February 2013.
In August the DoJ made a court filing re-asserting its case for gross negligence with regard to the accident. Such a finding could cost BP $21 billion under the U.S.'s Clean Water Act.
BP has already spent $14 billion on clean-up operations and paid out over $8 billion in claims. It is offering a further $7.8 billion in settlement to individuals and businesses affected by the disaster on top of all the other costs.
BP last week embarked on a plan to re-arrange its assets in Russia, agreeing to sell its half of TNK-BP for $12.4 billion in cash plus a 19.75 percent stake in state-controlled Rosneft.
The aim is to realise a return from a business that has paid no dividends back to BP this year due to disputes with its co-owners, AAR, and to establish a relationship with Rosneft, which is at the centre of a much more government-controlled approach to resource development in Russia than was the case when BP bought into the country in the 1990s.
Investors are worried Rosneft, hampered by state-interference, will prove to be a poor investment, but Dudley said it was ``a great company with great opportunities.''
Ironically, TNK-BP, like the refining operations it is busy shedding as part of its divestment programme, also underpinned BP's forecast-beating result, and many analysts remain sceptical BP can catch up with its rivals in the industry.
``The sale of TNK-BP to Rosneft, while removing the headache of being in partnership with AAR, still leaves BP as a large minority in a company heavily influenced by the Russian state and a Macondo settlement with the U.S. DoJ appears no closer,'' said Richard Griffiths of Oriel Securities.
Peter Hutton of RBC Capital Markets also noted that BP's oil and gas production ``upstream'' arm - the part it plans to focus on in future - actually missed forecasts by about 4 percent.
BP's current production is about 50-50 oil and gas but its reserves are more skewed towards oil, and new acreage in Angola, Namibia, Uruguay and Brazil are expected to be more oil rich hydrocarbon provinces. The group has little in the way of liquefied natural gas coming on stream over the next five years, in stark contrast to some of its rivals.
It will present further details of its plans for the future in presentations to investors on Dec. 3.
Bigger rivals Exxon Mobil, Royal Dutch/Shell and Chevron report results later this week.
(Additional reporting by Blaise Robinson in Paris; Editing by Mark Potter)