BP is preparing to sell its North Sea operations, a move that would bring the curtain down on six decades of oil and gas production in one of Britain’s most important energy basins.
The shock decision prompted immediate warnings to ministers, with critics saying it should be treated as a “deadly serious wake-up call” about the future of the UK’s vast natural resources.
Industry voices have linked the planned sale to the burden of steep taxes and the Government’s Net Zero agenda, which has been driven by Labour’s Ed Miliband.
The announcement landed just a day after Prime Minister Andy Burnham acknowledged that revenues from North Sea oil could help relieve pressure from the cost of living crisis.
His comments appeared to signal a possible softening of Labour’s ideological opposition to new oil and gas drilling, a policy included in the party’s 2024 manifesto. With public finances under strain, he said the North Sea remained a resource “we can’t ignore”.
Analysts have estimated that reversing the ban introduced by Mr Miliband during his time as energy secretary could raise an additional £25billion in tax revenue for the UK over the next ten years while helping to protect thousands of energy sector jobs.
However, senior figures in the industry suggested BP has already concluded that it will not wait to see whether Mr Burnham can revive Britain’s approach to domestic energy policy.
The 117-year-old energy giant is now poised to exit North Sea production after confirming plans to put its North Sea business on the market as part of a wider strategy to streamline the company.
BP is putting its North Sea business up for sale as it seeks to end six decades of oil and gas production in the basin
It comes just a day after Prime Minister Andy Burnham admitted that North Sea oil revenues could ease the cost of living crisis
The move has been blamed on the impact of punitive taxes and the Government’s Net Zero drive, which has been spearheaded by Labour’s Ed Miliband
BP chief executive Meg O’Neill, said: ‘The North Sea remains integral to the UK’s energy system.
‘However, as we focus our portfolio and direct capital to our highest-value opportunities, we believe our North Sea business will be better positioned as part of another company.’
Earlier this year, BP held talks with Ithaca Energy over a near £2billion deal for the North Sea business, which employs around 1,100 people, but no agreement was reached.
BP’s North Sea business has five production hubs – two in the central North Sea, and three west of Shetland – and produced 117,000 barrels of oil equivalent per day in 2025.
Commenting on BP’s planned withdrawal, Andrew Griffith – the Tory party’s business spokesman – said: ‘This is one of those ‘moments’ that should serve as a deadly serious wake up call.
‘Britain needs to compete – for energy, capital and talent – but the Government carries on putting up taxes and piling on red tape.’
Andrew Bowie, the shadow energy minister, said: ‘BP has been drilling in British waters for six decades, but because of Labour’s disastrous Net Zero dogma it faces extinction.
‘Andy Burnham should break with the past do what the Conservatives have called for and immediately approve the Jackdaw and Rosebank sites and cancel their plans to ban on new licences in the North Sea.’
Reform UK’s deputy leader Richard Tice said: ‘This is yet another damning indictment of Britain’s failed energy strategy.
‘Years of punitive windfall taxes and ideological net stupid policies by both Labour and the Conservatives have made the UK one of the least attractive places to invest in oil and gas.
‘The North Sea still has billions of barrels of oil and gas left to produce but for some bizarre reason this Government prefers to import our energy from abroad. Reform UK would end this madness.
Russell Borthwick, chief executive of Aberdeen & Grampian Chamber of Commerce, said: ‘Today’s announcement from BP should be a defining moment for the new PM. How many more jobs need to be lost before the UK Government acts?
‘This decision is another stark reminder that confidence in the UK continental shelf has been badly shaken after years of policy uncertainty, punitive taxation and mixed messages about the future of the industry.
‘The PM has spoken about taking a pragmatic approach to the North Sea. He now has an opportunity to turn those words into action.’
As well as Mr Miliband’s ban on new North Sea licences, Labour has been accused of blocking billions of pounds of investment after shelving proposals to scrap a controversial windfall tax.
Following the outbreak of the Iran war, then-Chancellor Rachel Reeves backtracked on plans to announce an early end to the Energy Profits Levy, which is due to expire in 2030.
A spike in energy prices as a result of the Middle East crisis led Ms Reeves to put those plans on ice, which infuriated the industry.
The Energy Profits Levy was introduced as a temporary measure by the previous Tory government following Russia’s full-scale invasion of Ukraine.
Combined with other taxes, it means the overall tax rate faced by oil and gas companies operating in the UK is currently 78 per cent.
In her first Budget in 2024, Ms Reeves had previously increased the windfall tax on North Sea oil and gas producers to 38 per cent from 35 per cent and extended the levy by one year.
Mr Burnham yesterday hinted at a shift in the Government’s approach now that he has replaced Keir Starmer in Downing Street.
He revealed he had told US President Donald Trump that he would take a ‘pragmatic approach’ to fossil fuels during their first talks last week.
‘I indicated in the phone call that we had a week last Monday that I would take a pragmatic approach when it comes to the North Sea,’ Mr Burnham told reporters during a visit to Barrow in Cumbria.
‘And that is my intention as we go forward from here. There is a resource there. When people are struggling, we can’t ignore that. Hence, me indicating that to the President.’
It came after Mr Trump said Mr Burnham – who he referred to as ‘the new gentleman’ – had told him he was going to ‘open up North Sea oil’.
Speaking in the White House, the US President added: ‘You have one of the most valuable oil finds anywhere in the world, and if the UK would use it, they’d be a wealthy country again.
‘And I tell you what, I could not get Starmer to use it. It was incredible.’
Chris Beauchamp, chief market analyst at investing and trading platform IG, said: ‘It says a lot when BP isn’t prepared to stick around to see if the new Government can re-energise the UK’s energy policy.
‘Clearly BP thinks it will take too long at a time when the need to exploit new energy fields is pressing, and waiting around for Whitehall to move is not a prudent use of resources.’
Ms O’Neill, who took charge in April, is leading a reorganisation of BP’s business and a pivot back towards fossil fuels after a disastrous foray into renewable energy projects.
She had previously said the North Sea had ‘untapped potential’ but operations have become increasingly challenging thanks to windfall taxes and Labour’s ban on new drilling.
The Energy Secretary Miatta Fahnbulleh said that she was in close contact with BP over the potential sale.
‘The North Sea is a vital national asset and we will take a pragmatic approach, recognising that oil and gas will be part of our energy mix for years to come,’ she said.
‘I’m in close contact with BP and have made clear that my priority is ensuring that the workers and local community are protected during this sale process.’
The Government is facing calls from the energy sector to approve the Jackdaw gas field east of Aberdeen and Rosebank oil field west of Shetland.
Mr Burnham could claim not to be breaking Labour’s manifesto pledge by approving the two projects, where licences were previously granted by the Tory government, while still not issuing any new licences.
Consultations on Jackdaw and Rosebank are due to run until August 10 and August 17, respectively.
The trade body Offshore Energies UK said the two fields could generate almost £30billion by the end of the next parliament.
Jackdaw’s owner said it could supply gas for 1.4million homes, starting this winter – reducing reliance on imports and the risk of a ‘gas supply emergency’.
BP said its headquarters would remain in the UK. ‘The UK has been our home for more than 100 years and will continue to play an important role in our future,’ Ms O’Neill said.
She added: ‘We’re proud of the jobs we create, the contribution we make to the UK economy, and the work we do to keep energy flowing every day.’
It emerged yesterday that the oil giant was preparing to slash 700 jobs in its upstream division – the discovery and extraction of crude oil – but not front-line roles such as technicians.
The aim is to streamline BP and boost returns amid signs of ‘potential oversupply and lower oil and gas prices’.
