LONDON: BP has launched moves to sell its North Sea business, the British oil and gas giant announced on Friday (Jul 31), as new Prime Minister Andy Burnham faces pressure to ease drilling restrictions in the area.
“The North Sea remains integral to the UK’s energy system,” BP chief executive Meg O’Neill said in a statement.
“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,” she added.
BP’s North Sea portfolio comprises five production hubs and employs about 1,100 people, the company noted Friday as it maintained its commitment to the UK, which will remain home to its global headquarters.
BP, whose performance has generally fallen behind that of its rivals in recent years, has in recent times slashed clean energy investment as it pivots back to its more profitable oil and gas business.
But the North Sea is not seen as deriving much profit for the group, even if more drilling is allowed.
TRUMP PRESSURE
US President Donald Trump has repeatedly called on Britain to ramp up oil and gas production in the North Sea.
Trump claimed that Burnham said in a first call between the pair last week that the prime minister would “open up North Sea oil”.
Questioned on the matter, Burnham told reporters Thursday: “I indicated in the phone call … that I would take a pragmatic approach when it comes to the North Sea, and that is my intention as we go forward.
“There is a resource there. When people are struggling (with high bills), we can’t ignore that,” he added.
Ruling centre-left Labour took power in July 2024 promising not to issue any new oil and gas drilling licences as it bids to steer Britain away from fossil fuels towards renewable energy.
Burnham, who replaced Keir Starmer as Labour Party leader and prime minister earlier this month, has vowed to abide by all the party’s manifesto commitments published ahead of its general election win.
But the new PM has promised also the most radical governing agenda in decades to ease the cost of living, which has been made worse by the Middle East war pushing up energy bills.
Burnham has already announced plans to remove value added tax (VAT) from electricity bills this winter.
Those favouring greater North Sea drilling argue that it would help to reduce such bills, while providing Britain with greater energy security – seen as vital after Russia’s invasion of Ukraine disrupted global supplies of fossil fuels and sent oil and gas prices surging.
BP SALE TALKS
BP on Friday said it was “launching a process to market its North Sea business for a potential sale”, without being drawn on any potential suitors.
The Financial Times in June reported that BP held unsuccessful discussions regarding a possible sale to smaller British peer Ithaca Energy for £2 billion (US$2.7 billion).
BP rival Shell last year merged its North Sea assets with those of Norway’s Equinor.
It comes as energy companies wait to see if drilling at two offshore fields in the area – Jackdaw and Rosebank – will be allowed amid court battles and bureaucratic delays.
BP’s latest announcement comes as it prepares to publish its second-quarter earnings on Tuesday.
Shell on Thursday said that its net profit tripled to US$10.8 billion in the April-June period as the US-Iran conflict sent oil prices soaring.
BP could also announce bumper profits, taking focus away from recent internal unrest.
The group faced a shareholder backlash at its annual meeting in April as investors rejected a resolution that would have reduced its climate reporting requirements.
That coincided with O’Neill becoming CEO, whose immediate task has been to also slash costs.
In May, BP unexpectedly removed Albert Manifold as chairman, citing “serious concerns” about governance standards, oversight and conduct at the company, which he has denied.
