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(Bloomberg) — BP Plc said it’s starting a process to market its North Sea business for a potential sale, as part of a wider review of the oil major’s portfolio.
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The North Sea unit, which Bloomberg News previously reported could fetch about £2 billion ($2.7 billion) in a full divestment, “will be better positioned as part of another company,” Chief Executive Officer Meg O’Neill said in a statement on Friday.
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BP has already agreed or completed a series of divestments over the past year, including the sale of its lubricants business Castrol, as it attempts to simplify its portfolio, strengthen the balance sheet and focus investment on its core upstream, downstream and trading operations.
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BP is the last remaining global oil major to have its own standalone North Sea business after Shell Plc and TotalEnergies SE combined their operations with others to form independent units in the aging offshore basin. Others such as Chevron Corp. and ConocoPhillips have sold their North Sea assets.
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The oil industry says the North Sea has become less attractive due to the UK government’s restrictions on exploration and development of new projects, as well as high taxes.
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“This is one of those “moments” that should serve as a deadly serious wake up call,” Andrew Griffith, shadow business secretary for the opposition Conservative party, said in a statement on Friday. “Britain needs to compete — for energy, capital and talent — but the government carries on putting up taxes and piling on red tape.”
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London-based BP has been shrinking its own presence in the region over the last decade, including the sales of its interest in the Shearwater field to Shell and the Forties pipeline system to Ineos Group Holdings SA. BP still holds a 45% stake in Clair, the largest oil field on the UK Continental Shelf.
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BP said it has been producing around 100,000 barrels of oil equivalent per day in the North Sea across five production hubs. That compares with its global output of about 2.3 million barrels per day.
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The North Sea could be the first sizable disposal under O’Neill, who in April became the first outsider to be appointed BP’s CEO. O’Neill and then-Chairman Albert Manifold had sought to reverse years of underperformance, which has brought pressure from activist shareholder Elliott Investment Management and cost former CEO Murray Auchincloss his job.
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Manifold has since been removed and O’Neill will now own BP’s turnaround story. The company said this week it will cut about 700 jobs in production and operations.
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BP reports second-quarter earnings on Tuesday, O’Neill’s first full quarter at the helm.
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—With assistance from Jamie Nimmo and Dylan Griffiths.
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(Updates with reaction from the UK shadow business secretary in sixth paragraph.)
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