BP Puts North Sea Business Up for Sale Amid Tax Pressure – NATIONAL NEWS

BP has announced plans to sell its entire North Sea business, bringing to a close around 60 years of direct involvement in British oil and gas production in the basin.

The FTSE 100 energy company, which operates five offshore platforms in UK waters, said the decision forms part of a wider programme to reduce costs and focus investment on its highest value projects globally.

The move comes against the backdrop of changes to the UK’s energy profits levy. The tax was introduced in 2022 following a surge in energy prices after Russia’s invasion of Ukraine. Since taking office, the Labour Government has increased the levy up to 38 per cent and extended it until 2030.

Combined with existing taxes, North Sea oil and gas producers now face an effective tax rate of 78 per cent.

BP chief executive Meg O’Neill said the North Sea remained “integral” to the UK’s energy system but said the company’s assets would be better placed under different ownership as BP reshapes its global portfolio.

The announcement prompted criticism from opposition politicians, who argued the tax regime has made investment in the UK North Sea less attractive.

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Andrew Griffith MP, the Conservative Shadow Secretary of State for Business and Trade, described the decision as “a deadly serious wake-up call”.

He said:

“Britain needs to compete, for energy, capital and talent, but the Government carries on regulating, putting up taxes and deterring investment. Labour simply don’t understand business.”

Richard Tice, Reform UK’s energy spokesman, also criticised the Government’s approach, suggesting BP’s withdrawal from the North Sea could eventually lead to the company relocating its headquarters overseas. He described the UK’s net zero strategy as “the greatest policy blunder of the century”.

Independent energy analyst Kathryn Porter said BP’s exit from the North Sea could raise wider questions about the company’s long-term presence in London.

The announcement came a day after Prime Minister Andy Burnham indicated his Government may be prepared to support further North Sea oil and gas drilling, saying Britain “cannot ignore” its domestic reserves.

The previous Labour administration under Sir Keir Starmer had faced criticism over restrictions on new North Sea developments. Former Energy Secretary Ed Miliband delayed final approval of the Rosebank and Jackdaw projects, despite both already holding licences, arguing they would not reduce household energy bills. His successor, Miatta Fahnbulleh, is now expected to approve both developments.

Andrew Bowie MP, the Conservative Shadow Energy Secretary, called on the Government to approve the projects immediately and abandon plans to prevent new North Sea exploration licences.

BP employs around 1,100 people directly in its North Sea operations and approximately 14,000 people across the UK.

The company said its global headquarters would remain in Britain even if the North Sea business is sold.

The announcement follows news earlier this week that BP plans to cut around 700 jobs as part of a wider restructuring programme. The company said it is responding to challenging market conditions and a period of oversupply in global oil and gas markets.

Earlier this year BP held talks with Ithaca Energy over a possible sale of the North Sea business, in a deal reportedly valued at around £2 billion, although negotiations did not reach agreement.

Ms O’Neill said the UK would remain central to BP’s future.

“The UK has been our home for more than 100 years,” she said. “The North Sea workforce is highly skilled and these assets remain resilient. We believe they can continue to create value under new ownership.”

The proposed sale marks one of the most significant changes in the history of Britain’s offshore energy industry and comes as debate continues over the future of North Sea oil and gas production, energy security and investment in the sector.