Oil producer Apache, a subsidiary of APA Corporation, has suspended drilling operations at its assets in the North Sea offshore UK, reported Reuters.
The company is also reducing its workforce in the UK as the operation is no longer competitive due to high taxes.
Go deeper with GlobalData
In November 2022, UK Prime Minister Rishi Sunak increased the Energy Profits Levy (EPL) from 25% to 35% on oil and gas companies, thus bringing the total taxes on the sector to 75%.
Effective until March 2028, the tax applies to profits made from oil and gas extraction in the UK.
However, last week, the UK Government announced its decision to scale back the windfall tax on oil and gas producers in case global energy prices drop to a certain level.
An Apache spokeswoman was quoted by the news agency as saying in an email: “We are reassessing our investments, as we consider the challenging UK macro environment with its increasingly costly and burdensome tax and regulatory regime.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData“Given the business climate for the oil and gas industry in the UK, these assets have become less competitive in comparison to the rest of our portfolio.”
As per the latest windfall tax, suppliers will only pay 40% in tax in case oil prices fall to, or below, £56.91 ($71.40) per barrel for a period of three consecutive months. For gas suppliers, the rate is set at £0.54 per term.
Earlier this year, Reuters reported that UK-based company Harbour Energy plans to cut jobs due to the windfall tax imposed on the oil and gas sector.
