BP says North Sea is no longer 'competitive' and urges Andy Burnham to scrap windfall taxes on oil and gas

By CALUM MUIRHEAD, EXECUTIVE EDITOR, FINANCIAL MAIL ON SUNDAY Published: 16:17, 4 August 2026 | Updated: 16:19, 4 August 2026 The boss of BP has said the North Sea is no longer ‘competitive’ as she urged Andy Burnham to scrap windfall taxes on the oil and gas industry. Meg O’Neill, who took over leadership of the firm in April, last week announced it was putting its North Sea business up for sale, ending more than 60 years of production in the region. The oil boss said the decision had been made because the North Sea business ‘just doesn’t compete for capital’ with its other operations around the world. O’Neill added that BP had already received interest from other firms in buying up the assets after hoisting the for sale sign. ‘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. But the move has fuelled fears that a crippling windfall tax on oil and gas firms in the UK risks driving the industry out of the North Sea entirely leaving Britain even more reliant on energy imports from abroad. The levy was originally introduced by the Conservatives in 2022 and set at 25pc on profits made in the North Sea. The BP Etap platform (Eastern Trough Area Project) in the North Sea, east of Aberdeen It was set to expire in 2025 but was extended to 2030 when Labour came to power while the rate was also increased to 38 per cent, meaning any profits are currently taxed at an effective rate of 78pc, which companies have warned has made operating in the region increasingly unviable. In its results for the first half of this year, BP revealed that Labour’s decision to extend the tax had added £401m to its tax bill last year and another £72m so far this year. Despite this the company’s profits surged to £6.6bn from £2.8bn in the first six months of 2026 as it cashed in on the rise in global oil prices sparked by the Iran war which erupted in February. But O’Neill said she had spoken to Burnham and urged him to back Britain’s fossil fuel industry. Meg O'Neill warned the North Sea business ‘just doesn’t compete for capital’ with BP's other operations around the world. ‘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. ‘I've had a conversation with the prime minister where he, you know, reinforced his desire to work closely with business, to be pragmatic. And the message I left him with was, you know, the UK gets 75pc of its energy from fossil fuels today, so that's oil and natural gas. ‘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,’ she added. BP’s North Sea business includes five oil platforms and employs around 1,100 people. O’Neill’s comments will pile pressure on the government to greenlight new projects in the area after Ed Miliband blocked more drilling when he was energy secretary under Sir Keir Starmer. Scotland’s First Minister John Swinney weighed into the row over the North Sea’s future on Monday, saying the ‘destructive’ windfall tax was ‘harming investment and jobs in Scotland – and the new Prime Minister must look at this issue as a matter of urgency.’ US president Donald Trump has also pushed Burnham to restart drilling, saying Britain was ‘essentially bankrupt’ without tapping North Sea oil and gas.