BP divests stakes in North Sea carbon capture schemes as strategy shifts under new leadership
Meg O'Neill's administration dismantles the green division established by Bernard Looney, citing shareholder dissatisfaction and government restrictions on North Sea exploration.
BP has confirmed plans to sell stakes in two flagship carbon capture and storage projects in north-east England, marking a strategic retreat from the green agenda championed by its former leadership. The oil firm intends to reduce its equity in the Net Zero Teesside scheme and the Northern Endurance Partnership, moves that signal a significant shift in corporate direction following the departure of CEO Bernard Looney.
The decision to divest comes as the company seeks to bring in additional partners to support the long-term future of the schemes, which have recently commenced construction. While BP stated the time is right to sell a portion of its equity, the specific percentage of shares to be sold remains undisclosed, and the company has not confirmed whether it is currently in active discussions with potential buyers.
This strategic pivot aligns with the broader actions of new CEO Meg O'Neill, who is reviewing the company's global portfolio to return to traditional upstream and downstream operations. O'Neill has already announced plans to dismantle the 'gas and low-carbon' division established under Looney, effectively reversing the structural changes that had been implemented during the previous administration.
The move is viewed as a response to shareholder dissatisfaction regarding the green agenda, which Looney had described as a tremendous business opportunity to create a zero-carbon industrial cluster. However, the initiative failed to secure the necessary backing from investors, leading to a tumultuous period for the 117-year-old firm that has now resulted in the dismantling of the relevant division.
The timing of the divestment coincides with a complex political environment in the UK, where the government has banned new exploration licences in the North Sea after more than 60 years of BP operations in the basin. Reports suggest O'Neill is considering a wider retreat from the region, potentially influenced by these government restrictions and political tensions surrounding windfall tax amendments.
Tensions between the corporation and the state were highlighted when Energy Secretary Ed Miliband recently condemned BP's windfall profits as morally and economically wrong before deleting the post. This public friction underscores the difficult operating conditions the company faces as it attempts to navigate its future role in the North Sea.
Other stakeholders remain involved in the projects despite BP's exit strategy, including Norway's Equinor, which holds a stake in both schemes, and France's TotalEnergies, which has a stake in the NEP pipeline project. The reduction of BP's involvement will alter the composition of these ventures, but the core infrastructure plans for the Teesside power plant and offshore pipelines are expected to proceed.