By Will Jones8 August 2026 3:00 PM
The Treasury faces a £13 billion hit from Labour’s ‘green’ North Sea shutdown, BP’s former finance chief has warned. The Telegraph has the story.
Brian Gilvary, who sat on the board of BP from 2012 to 2020, said punishing tax rates and a ban on new drilling had prompted many oil and gas operators to halt activity in British waters sooner than expected.
As a result, companies are ripping pipes and platforms out of the sea far earlier than planned. The vast costs of such decommissioning can be claimed back against the tax paid on previous years’ profits, meaning a huge rebate bill for the Treasury.
The latest estimates suggest the rebates, plus foregone tax from North Sea operations, could cost the Treasury around £13 billion between now and 2035.
Writing in the Telegraph, Gilvary, who is now Chairman of Sir Jim Ratcliffe’s Ineos Energy, said: “Forcing fields to close prematurely does not simply switch off future tax receipts; it also brings forward the point at which those decommissioning tax reliefs crystallise, increasing the near-term pressure on the public finances.”
Gilvary said the decline of the UK oil and gas industry under Labour was “eroding long-term national wealth” and damaging “the fiscal capacity to fund public services”.
The warning comes a week after BP announced plans to exit the North Sea by selling its operations there. Meg O’Neill, the company’s Chief Executive, has since said the region “doesn’t compete for capital”.
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Oil and gas companies face a 78% levy on their UK profits after Labour increased a windfall tax on the industry when it came to power. The Government has also extended the levy by two years, from 2028 to 2030.
Gilvary said BP’s decision to exit the North Sea was “a tangible warning sign” about the cost of these policies.
He said: “When major operators retreat, the consequences ripple far beyond corporate balance sheets.
“Investment falls, supply chains weaken and highly skilled jobs, many clustered in Scotland and the North East, begin to disappear. Tax revenues decline, and with them the fiscal capacity to fund public services and the energy transition itself.”
Annual decommissioning costs have already risen from £2 billion in 2024, the year of Labour’s election, to £3 billionn every year from now to at least 2030, according to data from industry regulator the North Sea Transition Authority (NSTA).
The NSTA predicts at least £28 billion will be spent on shutting down the North Sea from now to 2035. This implies a total cost to the Treasury of around £13 billion over that period.
Worth reading in full.
The oil field(s) of the north sea can probably all be tapped from the the Norwegian side, with a little help from lateral drilling.
Why would you setup or remain under UK rule when you can get a better reward for your efforts via the Norwegians.
Depending on the UK government of the day, the UK could insist that those taking the oil from the ground have to pay a climate tax proportional to the profits realised. The questions is, what proportion and will it be greater than 100%.
As of this week, that last paragraph is /s. How long before that changes?
I am struggling to capture all of the errors contained in this ludicrous suggestion.
What part of “this is the UK’s oil” did you not understand?
Phillip,
Let me put this in a simple form for yourself and others.
Imagine a bucket full of oil. Take a sheet of paper and draw the union jack on one side and the Norwegian flag on the other. Now lay the sheet of paper on top of the oil.
Now picture drilling a hole through the Norwegian side and then sucking the oil out from there.
Guess what, from that SINGLE side of the bucket you can drain the WHOLE bucket.
In the real world, the bucket will be actual oil pondages, trapped in anticlines and other similar features. If the top of one of those anticlines is across the line on the map, then you get all the oil. If the trap is on the UK side, then you drill laterally to intersect the storage and then tap as usual.
I hope that makes sense. If not, I’ll get out my crayons and see if I can draw you a large picture of this process. And if you doubt this can actually be done, think back to the gulf war and the claims that Iraq made regarding being robbed by Kuwait.
And of course, if you forgot to put the /s tag on your comment, then you can ignore this response.
Yes, Eng Ian that makes perfect sense.
That aside, I remember my trip to Scotland 40 years ago when the country was ecstatic about North Sea oil and the promise it had for prosperity. Now the whole enterprise is being dismantled. As an American from Wyoming with oil wells all around me I say that Britain has lost its sanity! All that black gold just waiting to be used to provide energy and wealth for your country yet it is not being used but, as you say, left for Norway to take. It is just crazy!!!
Scotland should split from the UK and seize control of North Sea oil and gas fields. They could then sell the oil and gas to Britain, Wales, N. Ireland, Ireland and the EU countries, and then they would get really rich like Norway.
More geopolitical brilliance from Harold. Is there any problem you can’t solve?
What is this “Britain” you are referrng to? It clearly doesn’t include Scotland, Wales or Northern Ireland. Could it be England, by any chance?
And don’t forget the gas!
It is you who have missed off the /trash tag.
https://getglobalgroup.com/horizontal-drilling-how-it-works-and-why-it-matters/
Offshore PlatformsOffshore platforms are enormously expensive to build. But from a single platform, operators can now drill dozens of horizontal wells in different directions, reaching reservoirs spread across a huge area of the seabed. This makes offshore development far more cost-effective than it used to be.
It’s not so much that as the earliest and biggest production platform become pumping stations for various smaller, low/unmanned production platforms and subsea production facilities, at smaller nearby fields that feed into them over tie back pipelines.
The smaller fields themselves would not be economically worthwhile without a shorter tie back to the host platform; and the host platform would need shut down a decade earlier if not also getting revenue from its satellite fields.
you have absolutely no idea of the physics of hydrocarbon trap targeting and drainage in and around the North Sea Graben once drilling and completions are complete….
For one, anticlinal traps are one of many types present in the NS basin.
Secondly, there are stringent globally recognised hard prospect and field limits that are adhered to. In the North Sea basin these are known as Unitisations.
Unitisation is a direct and effective solution to the “draining” problem. By treating the reservoir as a single unit, countries agree on a fair apportionment of reserves. For instance, when it was decided to include an additional reservoir formation in the Statfjord field, the UK and Norway agreed on a “redetermination” of their shares
stop eating your crayons.
This might be an answer to my question about international law. It suggests that it is okay to take oil out of one country’s area from another country’s area where there is an agreement to do so. That, in turn, suggests that if there is no such agreement it would be illegal to do so.
‘…think back to the gulf war and the claims that Iraq made regarding being robbed by Kuwait.’
Iraq’s complaint was that the Kuwaitis were ‘slant drilling’ wells whose boreholes mostly extended under Iraqi territory, not that they were producing from a common reservoir.
Unfortunately, some dunderhead(s) in the US State Department gave Saddam Hussein (then our man in Bagdad) the idea that the US didn’t really have a pony in the race.
The rest is history.
I’ll assume that what you are talking about is technologically possible. However, would it be legal under international law? No idea. Just wondering.
I’m with you. If two neighboring properties are both on top of the same pool of oil, is it really as simple as “first come, first served” and drill and pump as fast as possible before your neighbor does?
I’m willing to bet there are scads of laws requiring some sort of sharing. The same applies to all mineral rights — coal, gold, whatever. If I find a gold vein while digging a well or basement and tunnel under my neighbors’ property to chase it, surely there are laws against me doing so without some kind of permission, whether from my neighbors or the government. (And this is aside from any worries about undermining, ha ha, the structural integrity of their house.)
The same must apply to undersea oil fields. Can Norway actually get away with draining the entire pool just because the UK has banned drilling and pumping their share? I doubt international law allows that.
Subject to any ‘unitization’ agreements in place, I would think that as long as the Norwegians don’t actually drill into a UK block, they can produce whatever they want to.
People need to dispel themselves of the idea that oil reservoirs are like storage tanks that can be drained. They are actually (usually) sedimentary rocks with very real geophysical limits (e.g., extent, porosity, permeability, pressure, saturation, etc.) that dictate how much and how fast they can be economically produced.
There are also physical and economic limits on drilling and completions. Among other considerations, drill pipe and other tubular goods are neither weightless nor cheap, so the idea of drilling miles of hole just to ‘drain’ someone else’s concession is ludicrous.
Yes, it is that simple. England has declared it will no longer access this resource, therefore any “neighboring” country can access it. Use it or lose it, and since England is bankrupting itself they can’t afford a legal fight to stop them. Choices have consequences, and the people of England are paying for all those choices.
Begging the question of economic practicality, we have been executing unitization agreements for many decades. Also in the middle east.
It belongs to whoever pumps it, idiot.
It’s makes no sense to NOT develop your own oilfields and while having the necessity of buying oil from other countries…not to mention politically finagling taxes to make your own oil production expensive simply to justify using unreliable energy sources.
Just as it made no sense for Justin Perry (née Trudeau) to decide that there was no business case for building facilities to export oil/gas (citing long distances from gas fields, high infrastructure costs, and Europe’s rapid green energy transition)…now we are left with catch up and the current mortician in charge making promises with his mouth that he knows will not be fulfilled…
Exactly and Norway is doing just that unlike the idiots in Government here in the UK.
“In Norway 76 blocks have been offered for exploration in the Barents and Norwegian Seas and 57 new production licences have been issued for the Norwegian continental shelf”
IEA ‘World Energy Investment 2026’ (May 2026)
Exactly right. And we don’t have to leave the country to see such foolishness, witness NY’s and CA’s blocking production of their own resources.
Hey no problem, a climate tax on the general population can bring n boatloads of money for the Party priorities.
The country risk is too high for investors to look at the UK. Move along.
Wonder how long before British Petroleum vacates its properties in the UK and becomes GP – Global Petroleum (or similar)? At some point, the brilliant taxologists in the UK government will pass laws to tax EVERYTHING BP earns around the world. Why stay in a location that is actively hostile to your business?
BP should move their headquarters to Houston. Chevron was founded in 1880 in California. All the environmental and climate laws passed by Gov. Gavin N. were so onerous to company profitability, they threw in the towel ln 2025 and moved their headquarters to Houston.
I think that many years ago, BP announced that BP no longer stands for British Petroleum. I think that BA did the same thing: announcing that BA no longer stood for British Airways. And BT no longer stands for British Telecom.
You know, I had the same thought. So I looked it up, and – oh, my – the AI answer was that it still stood for British Petroleum. Looked a little further, and you’re right! BP technically is “bp*.” It calls its sectors “bp America,” “bp Global,” etc. Gee, what is the world coming to, when you can’t trust an AI. (Actually, this is the first time I didn’t crosscheck an AI answer…ever since the black George Washington…)
Appreciate the correction_ i REALLY try to make sure posts are accurate!
*and the lower case “bp” is how they write it.
Yes “Tax revenues decline, and with them the fiscal capacity to fund public services and the energy transition itself.”
No one can build out a Wind field or a Solar farm without a prosperous Oil Field and it’s skilled engineers and workforce to support it.
Meanwhile the ever greenwashing Bezos has a gas fired data center project in west Texas expected to product 33 million tons of CO2 emissions annually off grid. How does that compare to UK tokenism?
GOOD! UK needs to be severely punished as long as they continue with this climatarded stupidity.