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.
Ministers were told the bombshell announcement on Friday morning should serve as a ‘deadly serious wake up call’ over the future of Britain’s huge natural resource.
The move was blamed on the impact of punitive taxes and the Government’s Net Zero drive, which has been spearheaded by Labour’s Ed Miliband.
It comes just a day after Prime Minister Andy Burnham admitted that North Sea oil revenues could ease the cost of living crisis.
He hinted at a shift in Labour’s ideological ban on new drilling, saying that at a time of tight public finances the North Sea was a resource ‘we can’t ignore’.
Experts have predicted that lifting the ban imposed by Mr Miliband when he was energy secretary could generate £25billion in extra tax revenues for the UK over the next decade and support thousands of jobs.
But BP is set to no longer be part of North Sea production after it announced it is putting its North Sea business up for sale as part of a strategy to slim down the group.
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.’
It comes just a day after Prime Minister Andy Burnham admitted that North Sea oil revenues could ease the cost of living crisis
BP will exit the North Sea, putting its business up for sale after 60 years of operations
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 operates five key production hubs in the North Sea region, including the Clair oilfield, the largest on the UK continental shelf.
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.’
Senior Tory MP Andrew Griffith, the shadow business secretary 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.’
BP’s planned withdrawal from the North Sea comes after Mr Burnham promised a ‘pragmatic’ approach to drilling in the region following a call with President Donald Trump.
The PM said: ‘There is a resource there. When people are struggling, we can’t ignore that.’
He has been urged to ‘get Britain drilling’ and approve licences for the Rosebank oil field and Jackdaw gas field, which could be decided as soon as next month.
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.’
On Thursday, it emerged 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’.
This is a developing story
