HOUSTON, June 9 (Reuters) – U.S. oil producer Apache Corp on Friday said it was suspending drilling in the North Sea and reducing its British workforce because high taxes have made the operation less competitive.
The unit of APA Corp (APA.O) did not say how many workers would be cut as a result of the move.
The UK last May imposed a windfall profit tax on oil and gas producers that was raised to 35% in November, bringing total tax on the sector to 75%, one of the highest in the world.
“We are reassessing our investments, as we consider the challenging U.K. macro environment with its increasingly costly and burdensome tax and regulatory regime,” an Apache spokeswoman said in an email.
“Given the business climate for the oil and gas industry in the U.K., these assets have become less competitive in comparison to the rest of our portfolio,” she said.
North Sea producers have urged the government to introduce a oil-price floor to the Energy Profits Levy, which they warned risked jeopardizing investment and could cut output just as Britain seeks to boost domestic production.
Britain’s windfall tax on oil and gas producers will not be applied if prices drop below certain levels for six months in a row, the finance ministry said on Friday, a move the government hopes will boost energy security.
Reporting by Arathy Somasekhar in Houston and Shadia Nasralla in London
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