Job cuts loom as Apache announces end to North Sea drilling

Apache has confirmed that it is halting drilling in the North Sea due to the windfall tax being levied on operators.

The US firm - one of the top 10 operators in the UK Continental Shelf - also said it would be reducing its British workforce because the Energy Profits Levy has made it less competitive.

The announcement was made just hours after the UK Government’s new price floor on the tax - designed to renew confidence among companies and investors - was met with a lukewarm response from industry.

A new price trigger will cut the overall tax rate on energy firms from 75% to 40% if oil and gas prices fall to defined historic norms for two consecutive quarters.

But the tax rate will only return to 40% if both average oil and gas prices fall to or below $71.40 per barrel for oil and 54p per therm for gas.

Treasury papers show officials believe that the floor will never be triggered, based on current price projections. This means North Sea operators are likely to be left stuck on one of the highest tax rates in the world for several years.

Apache confirmed that this would lead to an unspecified number of job losses in its UK business.

“We are reassessing our investments, as we consider the challenging UK macro environment with its increasingly costly and burdensome tax and regulatory regime,” an Apache spokeswoman said.

“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,” she said.

Sir Ian Wood, one of the leading figures in the North Sea industry for 50 years, has joined a chorus of concern about the fiscal regime.

“The introduction of a price floor to the Energy Profits Levy is a modest step toward creating a somewhat more stable fiscal regime that will incentivise investment toward achieving greater domestic energy security,” he said.

“As prices return to normal and the windfall no longer exists, oil and gas producers are still experiencing one of the highest tax burdens of any sector in the world and the number of operators who have publicly announced plans to scale back or cancel operations in the North Sea with significant job losses linked directly to this policy is truly alarming.

“It remains to be seen whether or not this price floor will have any real impact in reversing these decisions and we urge the UK Government to monitor this closely and take further steps, as necessary, to protect the future of the industry.”

Street art festival hailed huge success

This year’s Nuart Aberdeen, the award-winning and internationally renowned street art festival, has been hailed the best yet, with thousands of people turning out to see the newest pieces on the city’s streets.

The June festival saw 13 acclaimed artists visit Aberdeen and create stunning new artwork in the city, ranging from large murals to smaller, more intricate installations.

The festival has attracted tens of thousands of visitors to the city since it first took place in 2017 and continues to draw crowds into the city centre, providing an ongoing boost to local businesses such as hotels, restaurants and bars.

Adrian Watson, Chief Executive of Aberdeen Inspired, said Nuart had been another incredible success, with the public keen to see it return next year.

“Nuart Aberdeen is widely regarded as the best street art festival of its kind in the world, and rightly so,” he said.

“The works that have been added to the streets of the city for this year’s festival are vibrant, thought-provoking and evocative.”