BP’s decision to put their North Sea assets up for sale is a sad day for many of my former colleagues in St James Square – and a source of deep insecurity for the 1,100 workers directly connected to UK Upstream.
This is among a wider Aberdeen-centred industry that, according to trade body Offshore Energies UK, is already losing 1,000 jobs a month due to government policies.
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Specifically, these are high taxes, a ban on new licences except from existing or connected fields, and a failure to take final decisions on Jackdaw and Rosebank – two fields ready to start operations this year.
This is within a wider context of Net Zero “leave it in the ground” dogma, thinly justified by wishing to “lead the world on climate change”, and a socialist transition plan for the region that attempts to direct companies to deliver to ever-shifting political targets rather than “drill, baby, drill”.
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The new Prime Minister, Andy Burnham, has so far offered the industry vibes not new decisions.
He has spoken of taking a more “pragmatic approach”, whatever that means, which has self-evidently not impressed one of Britain’s largest companies.
The job of BP’s new chief executive, Meg O’Neill, is to act in the interest of shareholders, not protect UK GDP.
That is Mr Burnham’s job and he just got his first bruising performance review.
For clarity, BP shares form a significant holding in many UK pension plans.
Those are not at risk; this decision will have been taken for sound commercial reasons, reflecting the value of BP’s core operations lies largely outside the UK, have done for years, and will do so in the future.
Noting further, this is not a full withdrawal; BP retains wider UK interests, including, for example, forecourts, an EV-charging network, trading and, most importantly, a global headquarters linked to a London listing and tax residency.
It can and will invest in other ways.
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However, the symbolism of our flagship oil and gas company exiting those interests at home, while massive unexplored reserves remain both on and offshore, should not be understated.
It does not necessarily spell the end for the business for sale.
The North Sea has been increasingly dominated by independent companies in the last decade.
They have lower overheads, different margin expectations, and can take different risks.
BP’s UK managers, conversely, have to compete internally for investment against global opportunities in the Gulf of Mexico, Azerbaijan and Iraq, with larger fields, lower costs, and unintuitively more attractive and stable fiscal regimes.
Those companies, however, are also looking abroad or consolidating at home.
The Government could then act to reassure them by changing their approach.
No more statements.
No more buck-passing from No10 to the Department for Energy Security and Net Zero.
Decisions: cut taxes, trim regulations, approve fields.
Lift the moratoriums, scrap the central planning and stop promoting managed decline – while sending a clear message the era of virtue signalling and leading the world in high prices and industrial self-harm is over.
Make Britain drill again – and bring BP home.
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