Oil giant BP is said to be in talks to sell its North Sea holdings.
The company held advanced talks with Ithaca Energy, with a potential deal worth £2 billion, the Financial Times has said.
The deal did not come off but it is understood BP is exploring further options, the newspaper reports.
Both BP and Ithaca declined to comment on the news.
BP has been involved in the North Sea for more than 60 years and remains one of the largest operators.
It has interests in up to 25 fields, including the iconic Clair - the largest conventional oilfield on the UK Continental Shelf.
But, against harsh trading regimes from successive UK governments, North Sea output has fallen as a share of BP production.
One issue has been the energy profits levy, or windfall tax. Introduced by the Tories, it now means operators face a 78 per cent levy on their profits.
BP has been involved in the North Sea for more than 60 years
|PA
Chanceller Rachel Reeves is understood to want to end the tax and replace it with a more “stable” mechanism.
But sources have said the war in Iran and soaring prices meant the move was delayed.
The FT reported that talks between BP and Ithaca Energy reached an “advanced” stage.
While the talks failed in recent weeks, BP is still exploring options and may pursue a deal with other competitors, it was claimed.
LATEST DEVELOPMENTS
Under Labour, new licences for North Sea exploration have been banned | GETTYLast month, Meg O’Neill, BP’s chief executive, ordered a review of its offshore operations.
The same month, the company removed its chaiman, Albert Manifold, with immediate effect.
It cited “serious concerns raised to the board related to important governance standards, oversight and conduct”.
Ithaca Energy has North Sea interests including Cambo, Britain’s second largest untapped oil field.
It also has a stake in Rosebank, the largest. BP and Ithaca have a shared interest in the Vorlich field, east of Aberdeen.
Under Labour, new North Sea licences have been banned.
Work at Rosebank and Jackdaw, a giant gas field, has been paused, pending legal challenges on climate grounds.
Energy Secretary Ed Miliband will have the final decision as to whether drilling can restart at either.
Andy Burnham, who is standing for office in the Makerfield by-election and is expected to make a leadership bid if elected, said he was “open minded” about the North Sea.
Asked by the New Statesman for his view on North Sea drilling he replied: “I’ve got something of an open mind, you know.
“I don’t have a sort of fixed position.”
The Government says it is working on ensuring the basin has a “prosperous and sustainable future”.
A spokesman said: “We’re giving the sector and its investors the long-term certainty to plan, invest and support jobs with plans to replace the Energy Profits Levy when it ends by 2030 or earlier, if its price floor is triggered.
“We are also making sure the North Sea has a prosperous and sustainable future through record investment that helps deliver the next generation of skilled jobs, while growing the clean energy industries of the future.”