UK Taxes Force BP to Sell Off Valuable North Sea Assets

BP is selling off its North Sea oil and gas assets due to punitive UK taxes. The company pays an effective tax rate of 78% on profits from oil and natural gas production in the North Sea, compared with U.S. oil companies which generally pay corporate tax rates of about 25% to 30% on U.S. profits.

The UK's Energy Profit Levy (EPL) was introduced by Boris Johnson's Conservatives at a rate of 25% in 2022 and increased significantly by Labor, now standing at 38%. The levy is set until 2030 and was described as 'money raised from these measures will support the transition to clean energy, improving energy security and independence, while providing sustainable jobs for the future and helping protect energy bills against future price shocks.'

BP pioneered North Sea exploration in the early to mid-1960s and produces about 5% of its oil and gas from the North Sea today. The company's UK upstream portfolio is estimated to be worth around $2.6 billion on a risked basis, with current North Sea producers among the likely bidders.