The boss of BP has said the North Sea is not competitive as the Prime Minister comes under increased pressure to lower taxes on energy firms. 

BP announced its intention to sell its North Sea operations last week, with chief executive Meg O'Neill saying it would be ‘better positioned as part of another company.' 

As BP posted another surge in profits, O'Neill today said the region 'just doesn't compete for capital'. 

In her first Budget in 2024, Rachel Reeves increased the windfall tax on North Sea oil and gas producers to 38 per cent from 35 per cent and extended the levy by one year. This, combined with the Ring Fence corporation tax charged at 30 per cent and a supplementary charge of 10 per cent, brings their headline tax rate to 78 per cent.  

Speaking to CNBC, O'Neill said: 'The North Sea has been very important to BP for more than 50 years. It's a great basin, high-quality oil and gas resources, but when we look at how it fits into our portfolio today, it just doesn't compete for capital.'   

It came as BP's quarterly profits more than doubled in the last year on the back of volatile oil prices.

The oil firm revealed underlying replacement cost profit – its preferred measure – jumped by around 78 per cent to $5.7billion (£4.2billion) for the second quarter.

It marks the strongest quarterly profit in four years as higher oil prices helped to boost its refining and trading businesses. 

The FTSE 100-listed firm also said it would sell its US biogas business, which it bought for $4.1billion in 2022, as part of its streamlining efforts. 

It came as chief executive Meg O'Neill, who joined in April, said the oil giant was 'not making the most of our potential' with areas where performance 'fell short'.

She pointed to a decline in production and a sharp fall in upstream reliability, in addition to BP's refineries processing less crude.

'This was due, in part, to planned maintenance and the conflict in the Middle East, but this is a reminder that we have more to do to deliver consistent operational performance,' said O'Neill.

Upstream production will remain under pressure in the third quarter, while full-year reported production is expected to be lower than in 2025.

O'Neill said: 'Our performance over the past few years has not met our own expectations, let alone those of our shareholders. 

'We have not delivered consistently; we have written off too much value; and our costs and liabilities are not resilient enough in a low price environment.'

She promised 'urgent action' to progress the business, which includes plans to strengthen the balance sheet and invest with 'greater discipline'.

She also recommitted to simplifying BP's portfolio, as it continues its pivot back towards fossil fuels after a foray into renewable energy. Since O'Neill's appointment, BP has been reorganised into two segments, upstream and downstream.

In recent weeks, BP has sold its Gelsenkirchen refinery in Germany, agreed to sell its Austrian retail business and announced its intention to sell its North Sea operation. 

Today BP announced plans to sell Archaea, a leading provider of renewable natural gas in the US.

'We know what we need to do, we are taking urgent action and I am confident that this is how we will grow long-term value for shareholders,' O'Neill said.

Shares in BP rose 0.72 per cent to 556.1p bringing year-to-date gains to 27 per cent. 

Duncan Ferris, analyst at Freetrade said: 'From a shareholder perspective, BP's willingness to be ruthless as it trims underperforming assets shows the business is not merely twiddling its thumbs while the market remains supportive.

'Assuming disposals achieve sensible prices, the portfolio trim should support further balance sheet improvements after net debt fell by more than $3bn during the quarter. The 4 per cent dividend increase provides shareholders with a further sign that the balance sheet is moving in the right direction.

'Moving forward, the question is whether a new-look simpler BP will be a more reliable BP.' 

Earlier this morning, Saudi Aramco, the world's largest oil company by production, reported adjusted net income of $33.4billion in the second quarter, up 33 per cent year-on-year.