KAPITAL STRIKE
By Charles Kennedy - Nov 08, 2024,
![]()
U.S. oil producer Apache plans to cease oil production at its assets in the UK North Sea by 2030, due to the windfall tax on operators.
Apache’s parent company APA Corporation said in an SEC filing that its assessment of the impact of the windfall tax, officially known as the Energy Profits Levy (EPL), resulted in findings that continued production in the UK North Sea would be uneconomical.
The Labour’s Autumn Statement confirmed last week that the windfall tax on UK North Sea operators is rising to 38% from 35%, effective November 1, 2024. The tax will now expire on 31 March 2030, a year later than the previous tax regime. The government is also removing the 29% investment allowance.
Since the tax was initially introduced by the Conservative government at the height of the energy crisis in 2022, oil and gas companies operating in the UK North Sea have been calling for certainty in the regulatory and tax framework. Recent changes in policies and the rising taxes have driven away operators, who say that a lack of North Sea investments would only make the UK more dependent on oil and gas imports.
Now Apache joins a growing list of companies reconsidering their presence in the UK.
“The Company determined the expected returns do not economically support making investments required under the combined impact of the regulations, and it will cease production at its facilities in the North Sea prior to 2030,” it said in the securities filing of the Q3 financial results.
The company’s investment program in the North Sea is now directed toward asset safety and integrity, APA said.
Apache entered the North Sea in 2003 after acquiring a 97% working interest in the Forties Field (Forties). Apache also has operated interests in the Beryl, Ness, Nevis, Nevis South, Skene, and Buckland fields and non-operated interest in the Maclure and Nelson fields.
The company had already suspended all new drilling activity in the North Sea in the second quarter of 2023, as part of its focus on capital allocation to optimize investment returns.
By Charles Kennedy for Oilprice.com
U.S. oil producer Apache plans to cease oil production at its assets in the UK North Sea by 2030, due to the windfall tax on operators.
Apache’s parent company APA Corporation said in an SEC filing that its assessment of the impact of the windfall tax, officially known as the Energy Profits Levy (EPL), resulted in findings that continued production in the UK North Sea would be uneconomical.
The Labour’s Autumn Statement confirmed last week that the windfall tax on UK North Sea operators is rising to 38% from 35%, effective November 1, 2024. The tax will now expire on 31 March 2030, a year later than the previous tax regime. The government is also removing the 29% investment allowance.
Since the tax was initially introduced by the Conservative government at the height of the energy crisis in 2022, oil and gas companies operating in the UK North Sea have been calling for certainty in the regulatory and tax framework. Recent changes in policies and the rising taxes have driven away operators, who say that a lack of North Sea investments would only make the UK more dependent on oil and gas imports.
Now Apache joins a growing list of companies reconsidering their presence in the UK.
“The Company determined the expected returns do not economically support making investments required under the combined impact of the regulations, and it will cease production at its facilities in the North Sea prior to 2030,” it said in the securities filing of the Q3 financial results.
The company’s investment program in the North Sea is now directed toward asset safety and integrity, APA said.
Apache entered the North Sea in 2003 after acquiring a 97% working interest in the Forties Field (Forties). Apache also has operated interests in the Beryl, Ness, Nevis, Nevis South, Skene, and Buckland fields and non-operated interest in the Maclure and Nelson fields.
The company had already suspended all new drilling activity in the North Sea in the second quarter of 2023, as part of its focus on capital allocation to optimize investment returns.
By Charles Kennedy for Oilprice.com
No comments:
Post a Comment