BP's chief executive, Meg O'Neill, has stated that the North Sea is no longer a competitive region for investment and has urged British Prime Minister Andy Burnham to repeal windfall taxes on the oil and gas industry. This comes as BP announced last week its decision to put its North Sea business, which has operated for over 60 years, up for sale.
O'Neill explained that the North Sea operations "just doesn't compete for capital" with BP's other global ventures. Despite this, she expressed optimism about finding a buyer, noting unsolicited interest from other companies in BP's assets. "There are plenty of other players that have approached us unsolicited, expressing interest in the basin, and so I am very optimistic that the assets that we have today will continue to be profitable in the hands of a future owner," O'Neill told CNBC.
The move has intensified concerns that the UK's windfall tax on oil and gas firms could drive the industry out of the North Sea, potentially increasing Britain's reliance on foreign energy imports. The tax, initially introduced by the Conservative government in 2022 at 25% on North Sea profits, was extended to 2030 and its rate increased to 38% by the Labour government. This results in an effective tax rate of 78% on profits, which industry representatives have warned makes operations increasingly unviable.
BP reported that the extension of the tax added £401 million to its tax bill last year and an additional £72 million in the first half of 2026. During this period, BP's profits surged to £6.6 billion from £2.8 billion in the same period the previous year, benefiting from rising global oil prices influenced by the conflict in Iran.
O'Neill emphasized the importance of domestic energy resources, stating, "The UK is still using a huge amount of oil and natural gas every single day, and we ought to be using our domestic resources first instead of buying those resources from a third party." She shared that she had spoken with Prime Minister Burnham, stressing the need for pragmatic policies to support Britain's fossil fuel industry. "The first barrel of oil we consume and molecule of natural gas we need should be coming from the UK North Sea, where we generate jobs, we generate tax revenue, we generate all those additional positive impacts," she added.
BP's North Sea operations encompass five oil platforms and employ approximately 1,100 individuals. O'Neill's remarks could increase pressure on the government to approve new projects in the region, particularly following past decisions by Ed Miliband, when he served as energy secretary under Sir Keir Starmer, to block further drilling.
Scotland's First Minister John Swinney also commented on the situation, describing the windfall tax as "destructive" and stating it is "harming investment and jobs in Scotland." He urged the new Prime Minister to address the issue urgently. Separately, former U.S. President Donald Trump has also encouraged Prime Minister Burnham to resume drilling in the North Sea, suggesting Britain's financial stability is linked to its oil and gas reserves.