BP will ignore “sentiment” and “history” in pruning its portfolio of assets, says its new-ish boss, Meg O’Neill. She demonstrated as much last week when putting the company’s 60-year-old North Sea oil and gas business up for sale, explaining on Tuesday that “it just doesn’t compete” in the internal battle for capital. Now comes a disposal that sends an equally unsentimental message about priorities. The US biogas business, Archaea, which was a prized acquisition in the brief green-tinged era of Bernard Looney, is on the block less than four years after BP bought it for $4bn (£2.98bn). Back in 2022, Looney, O’Neill’s predecessor-but-one, cooed over Archaea, which taps methane from landfill sites. It was “a fantastic fast-growing business” that would add “distinctive value” and “support our net zero ambition”. One hefty write-down later, the operation is judged surplus to requirements because it’s too capital-hungry for a group in debt-reduction mode. The clearing of the decks at BP is happening quickly after the strategic muddle of recent years. A sale of the solar power unit Lightsource is close but, as with the North Sea assets, it’s not just the green assets that are a target. A major refinery in Gelsenkirchen in Germany has gone. So, too, the Austrian fuel stations. And the sale of the lubricants business Castrol was under way before O’Neill arrived. By the end of the year, reckons BP, it will have reached its target to get net debt below $18bn, 12 months ahead of schedule. The process will have been massively assisted, of course, by the boom in profits and cashflow that followed the surge in oil and gas profits with the Iran war. BP’s profits more than doubled to $5.73bn in the three months to the end of June. Cue understandable outrage among campaign groups but zero surprise on the part of City analysts. BP sold its oil at an average of $94 a barrel in the second quarter, up from $67 in the first, enjoying only a slightly smaller increase in the price of natural gas. Profits were obviously going to be enormous, just as they have been at other oil majors. That is doubly so when constraints in the global flow of oil meant refining the stuff – where BP is also big – became a licence to print money in the period. For O’Neill, the next question from investors will be when she is going to rejoin other majors and restart share buy-backs, which were cancelled in February when the strain on the balance sheet was more acute than it is now. She dodged the question on Tuesday – but shareholders will expect an answer from a straight-talking chief executive soon-ish. Still, she was clear in the advice she had given to Andy Burnham if the new prime minister wished, as he says he does, to take a “pragmatic” approach to the North Sea. “The message I left him with was: the UK gets 75% of its energy from fossil fuels today, so that’s oil and natural gas,” O’Neill said. “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.” That is the case for more (or just more stable) domestic volumes, even as the UK keeps decarbonising: you do it to minimise imports, particularly of liquefied natural gas with its higher associated emissions. The UK’s net import dependency was 43.5% in 2025. There’s no chance of O’Neill reversing BP’s exit from the North Sea, it seems, but the other implied message in her comments about the competitiveness of the basin wasn’t hard to grasp. If Burnham wants to boost domestic supplies, it won’t be enough just to approve Adura’s Jackdaw and Rosebank fields for production. There will also have to be a rethink on the energy profits levy, AKA the windfall tax that dates from 2022, to incentivise investment. Politically speaking, it is tricky to lower the level at which windfall rates apply at a moment when the Iran war has created a fresh corporate profits bonanza globally. Burnham has said he was “looking at” the levy. It is one of the unavoidable big choices for October’s budget.
BP’s annual report once featured doodles of wind farms and a hashtag, #bpnetzero. That was 2020. Last week, the company’s website plainly stated: 'We produce oil and gas, trade energy, and make, ship and sell energy products.'
Chief executive Meg O’Neill is steering the firm away from its 2020 energy transition plan. The company announced the sale of its North Sea offshore assets, blaming high taxes and unpredictable regulation for making the region uncompetitive.
What happened to the green investment?
BP bought a biogas company in the U.S. named Archaea for $4 billion in 2020. It now plans to ditch that stake. O’Neill said the investment failed to 'deliver the returns we expect.'
She is now focused on the UK’s oil and gas industry. 'The first barrel of oil we consume and molecule of natural gas we need should be coming from the UK North Sea,' she told British media.
Energy transition in reverse
The 2020 strategy had promised to 'significantly scale-up our low carbon energy business.' Instead, the company is reducing its clean energy bets and doubling down on oil and gas.
O’Neill admitted 'our performance over the past few years has not met our own expectations.' BP has had two CEOs in six years, and its strategy has shifted twice as fast.
A message to the UK government
BP now argues that Britain needs to focus on its fossil fuel resources. 'We generate jobs, we generate tax revenue,' O’Neill said, explaining why the UK North Sea should lead energy production.
The company’s purpose, once tied to 'reimagining energy for people and our planet,' is now simply to 'deliver energy to the world, today and tomorrow.'