BP has initiated a sale process for its UK North Sea oil and gas assets after more than 60 years of operation in the region. This decision is driven by the company's strategy to focus its portfolio on "highest-value opportunities" and follows a period of increased energy profits levies and political pressure in the UK. The sale could be valued between $2 billion and $2.6 billion, with Rystad Energy estimating the higher figure.
The move is considered a pivotal moment for the UK's dwindling oil and gas industry, especially with new Prime Minister Andy Burnham weighing future fossil fuel projects. The sale comes after a 25% energy profits levy introduced by the Conservatives in 2022 was increased to 35% and then to 38% by Labour, extended until 2030, resulting in an effective 78% tax rate on North Sea energy profits. This tax burden has been a key factor in BP's decision.
BP's departure from the North Sea raises concerns about the future of the 1,100 people employed in its North Sea operations and the potential impact on the UK's energy security. There are also fears that this could prompt BP, one of the largest British companies and a significant component of the FTSE 100, to consider relocating its headquarters or shifting its share listing from London to the US, given the US's larger contribution to BP's assets and profitability.
Potential bidders for BP's North Sea portfolio, which includes assets in the Clair and Schiehallion areas west of Shetland and the ETAP complex, may include UK-focused operators like Neo Energy. Despite the sale, BP's new American CEO, Meg O'Neill, emphasized that the UK will continue to play an important role in BP's future, even as the company moves to smaller premises in Southwark, south London, next year and reduces its presence to primarily petrol stations, EV chargers, and an aviation fuel business in the UK.
Meg O'Neill stated that while the North Sea remains integral to the UK's energy system, BP believes its North Sea business would be better positioned as part of another company that can back its next chapter, recognizing its "world-class people, resilient assets and a proud heritage."
