Apache has reportedly put on hold its North Sea drilling activities and is slashing jobs in the UK citing that the operation has become less competitive due to high taxes.

The American oil and gas company did not reveal the number of redundancies driven by its decision, reported Reuters.

An Apache spokeswoman told the publication via an email that: “We are reassessing our investments, as we consider the challenging U.K. macro environment with its increasingly costly and burdensome tax and regulatory regime.

“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.”

In May 2022, the UK government introduced a windfall profit tax on oil and gas producers under the Energy (Oil and Gas) Profits Levy. It was increased to 35% from a 25% levy on ring fence profits of oil and gas firms operating in the UK or on the UK Continental Shelf (UKCS).

The British government’s introduction of the Energy (Oil and Gas) Profits Levy was in response to extremely high prices for consumers while adding that oil and gas companies were benefiting from “extraordinary profits”.

Last week, the HM Treasury said that the Energy Profits Levy, which places a marginal tax rate of 75% on oil and gas production in the North Sea, will continue for the next five years as long as the prices of oil and gas stay higher than historic norms.

However, the marginal tax rate will revert to 40% once prices consistently stabilise at normal levels for an extended period, said the HM Treasury.

Apache has been engaged in the North Sea since 2003 following the acquisition of a nearly 97% stake in the Forties field.

In 2011, the American oil and gas firm purchased additional assets from Mobil North Sea. These included operated stakes in the Beryl, Nevis, Ness, Nevis South, Skene, and Buckland fields and a non-operated stake in the Maclure field.

Apache also has a non-operated stake in the Nelson Field, which it bought in 2011.

The company’s UK North Sea operations contributed 14.4% of its 2022 production.