US oil firm Apache has announced plans to exit the North Sea because the windfall tax has made its UK operations "uneconomic".
The Texas firm will cease all production at its UK assets by December 2029, “well ahead of what would have been an otherwise reasonable time frame".
In addition to criticising the UK’s Energy Profits Levy — otherwise known as a windfall tax — John Christmann, chief executive of Apache parent firm APA, said UK regulators issued new rules that will require “substantial new emissions control investments” on facilities that operate in the North Sea beyond 2029.
He said: “After six months of evaluation, we have concluded that the investment required to comply with these regulations… coupled with the onerous financial impact of the Energy Profits Levy makes production of hydrocarbons beyond the year 2029 uneconomic.”
Apache took control of the Forties field in 2003 but suspended all new drilling activity last year. The firm will run a “very limited capital programme” in the North Sea next year before those assets are ultimately decommissioned, Mr Christmann said.
In a statement, the firm added: "The onerous financial impact of the EPL, combined with the substantial investment that will be necessary to comply with regulatory requirements, makes production of hydrocarbons beyond 2029 uneconomic.
"Looking forward, our focus will be on maintaining asset safety and integrity as we prepare for the responsible decommissioning of our assets.”
The Energy Profits Levy (EPL) - the official name for the windfall tax - is a levy on profits made from extracting UK oil and gas.
In the recent Budget, Labour raised the levy to 38% - meaning the total tax rate on the companies is now 78% - and extended it by a further year to 2030.
Apache's announcement comes just days after Harbour Energy was reported to have put its stakes in the Armada, Everest, Lomond, Catcher, and Tolmount fields up for sale.
Russell Borthwick, chief executive at Aberdeen and Grampian Chamber of Commerce, urged the UK Government to take urgent action.
He said: "We have have been warning for almost two years now that the windfall tax would drive capital, investment and jobs away from the North Sea.
"The UK Government must now work with industry swiftly to devise a new progressive tax regime for the North Sea, where the tax rate increases as oil and gas prices rise and decreases when prices fall.
"This framework should be predictable, allowing the sector to make future investment plans with certainty and confidence.
"This successor regime cannot wait until beyond 2030, by which time significant damage could be done to our domestic energy industry and its workforce. It should be pursued immediately."