BP has declared the North Sea oil and gas basin no longer viable and urged Prime Minister Andy Burnham to remove the UK’s windfall tax on the sector. The company warned the levy could force the industry out of British waters entirely.
Meg O’Neill, who took over as BP’s chief executive in April, announced last week that the company would sell its North Sea business. This move ends more than six decades of production in the region. She stated the decision came because the basin cannot compete for capital against BP’s global operations.
The windfall tax, introduced by the Conservatives in 2022 at a 25% rate, was extended by Labour until 2030 and raised to 38%. Combined with other taxes, the effective rate on North Sea profits now reaches 78%. In its results for the first half of this year, BP revealed the tax had added £401 million to its bill last year and another £72 million so far this year.
Despite the higher tax burden, BP’s profits surged to £6.6 billion in the first six months of 2026 from £2.8 billion in the same period of 2025. The increase followed rising global oil prices after the outbreak of war in Iran in February.
O’Neill said BP had already received interest from potential buyers for its North Sea assets, which include five oil platforms and employ around 1,100 people. “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,” she told CNBC.
Government urged to prioritize domestic production
During a meeting with Burnham, O’Neill argued for supporting the UK’s fossil fuel industry. She noted the country still depends on oil and gas for 75% of its energy needs. “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 said. “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.”
The remarks increase pressure on the government to reverse its stance on new North Sea drilling. Last month, Energy Secretary Ed Miliband blocked further exploration licenses approved under the previous administration. Scotland’s First Minister John Swinney called the windfall tax damaging on Monday, stating it was “harming investment and jobs in Scotland” and urging Burnham to act quickly.
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US President Donald Trump also commented, claiming Britain would be “essentially bankrupt” without its North Sea reserves.
BP’s decision to leave the North Sea marks a significant change for an industry long central to the UK’s energy supply. While the company insists the assets will stay operational under new ownership, the sale shows how global energy companies are adjusting their strategies amid regulatory and economic challenges.
The government now faces a difficult choice: maintaining revenue from a sector that still powers most of the country’s energy while speeding up the shift to renewables. The result will influence the UK’s energy future for years to come.
O’Neill’s position—that domestic production is better than imports—overlooks the fact that much of the North Sea’s output is already sold abroad, with the UK often buying back refined products. The real issue is not self-sufficiency but who benefits from the profits and jobs tied to extraction.
The windfall tax was meant to capture excess profits during high energy prices, but opponents say it has become a long-term burden that skews investment. Whether Burnham will reconsider remains uncertain, though the calls for change are growing stronger.
BP’s profits have surged despite concerns over its performance, as detailed in recent financial reports.
