BP eyes North Sea exit as tax load bites
BP is reportedly eyeing a potential exit from the North Sea as the tax load on energy companies seems unlikely to be eased with the Iran war.
The UK oil giant is considering either ceasing or partially winding down operations in the North Sea, according to Bloomberg, as part of an effort to strip assets and pay debt.
It said it would look to find around £2bn in full divestment, which could hit its control of basins in the North Sea.
The decision is subject to an internal review of its assets and operations.
A BP spokesperson told Bloomberg that it had a “strong North Sea portfolio with significant untapped potential, supported by a highly skilled workforce”, and did not comment further.
Major companies including Chevron and ConocoPhillips sold off assets in the North Sea, leaving the likes of Shell, Exxon Mobil and Total Energies as the last remaining companies in the area.
Miliband targets BP
Offshore Energies UK (OEUK), the lobby group for companies operating in the North Sea, has long campaigned for the government to relieve companies of the heavy tax burden imposed on energy companies.
The energy profits levy, introduced by the previous Conservative government and championed by Labour, and the ring fence corporation tax means the headline tax rate for companies in the North Sea is 78 per cent.
Prior to last year’s Budget, OEUK boss David Whitehouse said the fiscal regime meant oil and gas production in the North Sea could collapse “within years”.
It has argued that the tax rate stopped companies from investing in the region.
While most energy companies have come into a collision course with the government over accusations of profiteering, BP was specifically called out by energy secretary Ed Miliband after it posted a surge in profit to £2.4bn.
In a post on X, he said that “profiting from a crisis is morally and economically wrong” and that its profit showed why the government was “taxing these windfall profits to help fund support with the cost of living”.
Downing Street said the government was “making sure that companies pay their fair share, particularly in exceptional circumstances”. Miliband also deleted the post and instead said it “would be completely wrong for a government to stand by and allow companies to make excess profits from a war”.
Lobby groups pointed out that the rise in profit posted this week was due to global earnings rather than the North Sea.
A government spokesperson said: “We’re giving the sector and its investors the long-term certainty to plan, invest and support jobs with plans to replace the Energy Profits Levy when it ends by 2030, or earlier if its price floor is triggered.
“We are also making sure the North Sea has a prosperous and sustainable future through record investment that helps deliver the next generation of skilled jobs while growing the clean energy industries of the future.”