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.
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.
“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.
