On January 3rd, U.S. President-elect Trump urged the UK to “open up” the North Sea and dismantle the wind turbines installed in the area.
Trump stated on the social media platform Truth Social: “The UK is making a very big mistake. Open up the North Sea. Get rid of the windmills!”
His post was in response to reports that Apache, a subsidiary of the U.S. oil and gas producer APA Corp, plans to withdraw from the North Sea by the end of 2029. The company expects a 20% decrease in oil production in the North Sea in 2025 compared to 2024. Apache attributed its withdrawal from the North Sea to the windfall tax imposed by the UK government on oil and gas producers.
In October 2024, the UK government announced an increase in the windfall tax levied on North Sea oil and gas producers from 35% to 38%, extending the tax collection period by a year. The government aims to use the income from oil and gas to fund renewable energy projects.
By 2030, the UK aims to achieve the decarbonization of the electricity industry, which means reducing reliance on gas-fired power plants and rapidly increasing the generation capacity of renewable energy.
Oil and gas developers in the North Sea have warned that the increased tax rates in the UK may lead to a sharp decline in investment in the North Sea. These companies are rushing to withdraw from the North Sea before the tax hike.
Harbour Energy, a major oil producer in the North Sea, is looking to sell shares in North Sea oil fields and is reviving plans for a U.S. listing. U.S. oil giant ExxonMobil exited the North Sea region in July last year.
In recent years, some countries in the UK and continental Europe have set up wind turbine facilities in the North Sea. However, due to technological and supply chain issues as well as higher rates, this rapidly growing industry has faced significant challenges in the past few years, leading many companies to reassess their investments.
Denmark’s Orsted, the world’s largest offshore wind farm developer, reduced its investment and production capacity targets last year.
(Reference: Reuters)