BP North Sea sell off branded a 'defining moment' amid calls for urgent windfall tax action

BP says the decision is part of a strategy to slim down the group by selling off parts of the business. Business leaders said it was the “latest signal that the UK is at a crossroads”.

The energy giant has five production hubs in the North Sea, including two in the central sea and three to the west of Shetland. They produced 117,000 barrels of oil equivalent per day last year and employ around 1,100 staff. The sale could generate £2 billion for BP.

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Russell Borthwick, chief executive of Aberdeen and Grampian Chamber of Commerce, said: “Today’s announcement from BP should be a defining moment for the new Prime Minister.

“How many more jobs need to be lost before the UK Government acts?

“This decision is another stark reminder that confidence in the UK continental shelf has been badly shaken after years of policy uncertainty, punitive taxation and mixed messages about the future of the industry.

“The Prime Minister has spoken about taking a pragmatic approach to the North Sea. He now has the opportunity to turn those words into action.”

Mr Borthwick said that included scrapping the energy profits levy and replacing it with a permanent windfall tax mechanism before 2030 to create a “stable, long-term fiscal regime”.

He added: “The North Sea remains one of the UK’s greatest strategic assets. It underpins our energy security, supports hundreds of thousands of skilled jobs and generates billions for the public finances. But unless investors have confidence that Britain is open for business, more capital, more jobs and more expertise will continue to leave.”

Labour’s 2024 manifesto said it would not issue any new oil and gas licences in the North Sea. However Mr Burnham has left the door open for future North Sea drilling after telling US President Donald Trump “we can’t ignore” the natural resources.

The Prime Minister told Mr Trump he would “take a pragmatic approach when it comes to the North Sea” and added: “There is a resource there. When people are struggling, we can’t ignore that.”

When asked about the sale, the Prime Minister repeated that he would be “pragmatic” about the future of North Sea drilling.

Mr Burnham said: “There are a set of issues relating to the North Sea that I’m looking at.

“Obviously we have decisions looming relating to Jackdaw and Rosebank, there are issues related to the energy profits levy that people have raised with me.

“I’m looking at all of those things.

“I’ve indicated that I’ll be pragmatic about the North Sea. When people are struggling and when we need to help people you can’t ignore the resources that you’ve got, but we’ll make further decisions in due course.”

He added: “The question isn’t whether Britain will be using oil and gas, the question is where does it come from?”

Opposition parties are now piling the pressure on Labour to drop the windfall tax and prioritise investment in the industry to avoid further job losses in the north-east.

First Minister John Swinney said the announcement “marks a time of real uncertainty for workers”.

He said: “The firm announced on Friday its operations in the UKCS would be ‘better positioned as part of another company’.

“The Scottish Government will work closely with BP, trade unions and partners to understand the impact of the sale process and support workers.

“Within our limited powers, we will do everything we can to protect Scottish jobs and ensure our offshore energy industry can thrive.

“Westminster’s supertax on jobs is hurting Scotland, especially the north-east. The UK Government must scrap the energy profits levy and urgently act to protect jobs.”

Dave Doogan MP, the SNP’s Westminster leader, added: “There is no moral high ground to be found in ruining oil and gas jobs in Scotland to sponsor the very same jobs halfway around the world at a higher carbon cost, with our energy security put at risk and renewables investment lost.

“The policy enforced from Westminster is costing Scottish jobs, is costing our economy and is costing the climate.”

Shadow UK Energy Minister Andrew Bowie added: “BP has been drilling in British waters for six decades, but because of Labour’s disastrous net zero dogma it faces extinction.

“Andy Burnham should break with the past and do what the Conservatives have called for and immediately approve the Jackdaw and Rosebank sites and cancel their plans to ban new licences in the North Sea.”

He said scrapping the windfall tax should be paid for by cancelling net zero projects.

Jackdaw, an oilfield to the east of Aberdeen, and Rosebank, an oilfield to the west of Shetland, are both subject to consultation that are due to run until August 10 and August 17 respectively.

Meanwhile Reform UK has placed the blame on the SNP, Labour and the Conservatives.

Duncan Massey MSP, the party’s energy spokesman, said: “BP putting its North Sea business up for sale after more than 60 years is a damning wake-up call for the SNP, Labour and the Conservatives.

“While BP claims the operation would be better placed under another owner, 1,100 workers now face fresh uncertainty over their futures.”

BP’s chief executive Meg O’Neill said she believed the North Sea business would be “better positioned as part of another company”.

She 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 has world-class people, resilient assets and a proud heritage, and it is precisely these qualities that can attract an owner ready to back its next chapter.

“We are seeking an outcome that recognises that value.”

On top of this, BP is planning to cut around 700 jobs globally from its production and operations business, reducing its non-frontline roles by 8 per cent.

Scottish Secretary Douglas Alexander said he was also in “close contact” with BP and has had “constructive discussions”.

He said: “I and UK Government colleagues are working to ensure jobs and the local community are protected through this sale process are the first and foremost priority during any transition of ownership.

“The UK Government is clear - North Sea oil is a vital national asset, oil and gas will very much be part of the energy mix of the country for years to come.”