BP Set to Quit UK North Sea Oil in Pivotal Moment for PM Burnham

Protesters against the Rosebank field outside of the Court of Session in Edinburgh in November 2024. Photo by Jeff J Mitchell /Source: Getty Images Europe

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(Bloomberg) — BP Plc’s decision to put its UK North Sea business up for sale marks a critical moment for the country’s dwindling oil and gas industry as new Prime Minister Andy Burnham weighs whether to allow new drilling.

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As well as being one of the largest British companies, London-based BP is the only remaining oil major to have a standalone UK North Sea business. The sale of its assets, which could be worth about $2 billion, is both politically symbolic and financially significant for the future of the area.

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Burnham, who succeeded Keir Starmer as UK premier last week, has hinted at a friendlier approach to new fossil fuel projects in waters off the coast of Scotland. It’s a contentious subject that risks angering environmentally-minded voters on one side and labor unions on the other — both of which are core constituencies for the prime minister’s party. Opposition parties argue that new drilling would help reduce the cost of living. 

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BP’s announcement follows a period of tension between North Sea producers and successive British governments. Since 2022, when the ruling Conservative party imposed a windfall tax on offshore oil and gas producers, companies have argued that investing in the area was no longer competitive. When the current Labour government came to power two years ago, it extended this energy profits levy and banned new licenses for exploration in the basin. 

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BP’s move “should be a defining moment for the new prime minister,” said Russell Borthwick, chief executive of Aberdeen and Grampian Chamber of Commerce, located in the city that is home to the UK oil and gas industry. “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.”

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Investors and energy executives are watching intently to see whether Britain’s new leader will change tack. US President Donald Trump has also been taking a keen interest.

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In the biggest hint of the approach he’ll take so far, Burnham told Trump in their first call that he’d be “pragmatic” on the issue of drilling for oil and gas. This stance was welcomed by the president, who said the prime minister had “pledged to open up the North Sea.”

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“There is a resource there,” Burnham told reporters on Thursday, when asked about Trump’s comments. “When people are struggling — you can’t ignore that.”

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Trump consistently criticized Burnham’s predecessor for failing to back new projects in the North Sea. The president’s decision to upend global oil and gas markets by attacking Iran has also made the question of domestic energy production, and whether it should prioritize renewables or fossil fuels, even more of a political flashpoint.

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Meanwhile, the spread of wildfires across Europe in recent weeks, including a blaze in Suffolk, east England, has raised the salience of climate change.