BP PLC is reportedly considering a sale of its North Sea oil and gas business after more than six decades in the basin, as rising tax burdens and policy uncertainty continue to weigh on investment in UK offshore energy.
According to reports, the energy major recently explored a potential transaction involving its North Sea assets and rival Ithaca Energy, although no agreement was reached. BP is understood to remain open to alternative options as it reviews the future of its UK offshore operations.
A withdrawal from the North Sea would represent one of the most significant consequences yet of the government’s windfall tax regime, which has increased the effective tax rate on UK oil and gas profits to 78%.
The pressure on the sector intensified after Chancellor Rachel Reeves introduced further changes to the tax framework, including the removal of provisions that allowed companies to offset UK profits against losses incurred by overseas subsidiaries. The Treasury expects the measures to raise hundreds of millions of pounds annually to help fund cost-of-living support measures.
BP has been among the industry’s most vocal critics of the tax regime. In its latest annual report, the company warned that repeated changes to fiscal policy had created significant uncertainty for the UK oil and gas sector. The company estimated that the increase and extension of the Energy Profits Levy added approximately £539 million to its tax bill in 2025.
The company remains one of the largest operators in the North Sea, with interests in around 20 to 25 producing fields and a long-established presence in the basin. However, BP has already reduced its exposure through a series of disposals, including the sale of interests in the Shearwater field, Magnus platform and Forties Pipeline System.
The wider industry has also been undergoing consolidation. Shell has transferred its UK offshore assets into a joint venture with Equinor, while companies including Chevron and ConocoPhillips have sold assets to smaller operators.
Industry groups have warned that investment and employment are being negatively affected. Offshore Energies UK previously estimated that around 1,000 jobs per month were being lost across the sector as operators scaled back spending and activity.
The debate comes at a time when energy security has moved higher up the political agenda following disruption to global energy supplies during the Iran conflict. Several leading energy executives have called on the government to reconsider aspects of its North Sea strategy, arguing that domestic production remains an important component of UK energy resilience.
While BP has not confirmed any decision regarding its North Sea future, any exit would mark the end of a chapter that has spanned more than 60 years and would represent a significant shift in the landscape of the UK’s offshore energy industry.
