A MAJOR oil firm today announced it is pulling out of the North Sea after the UK Government extended the controversial Windfall Tax.

Tory and SNP chiefs blasted Labour after it emerged US-based Apache – which employs nearly 500 workers in Scotland – said it would end its operations in 2029 as production beyond that point would be “uneconomic”.

The firm blamed the impact of the Energy Profits Levy, which was hiked from 35 per cent to 38 per cent and extended for a year until March 2030 in Chancellor Rachel Reeves’s Budget.

North Sea industry chiefs had warned of job losses if they were squeezed further.

And the Texas-based Apache – now known as APA Corporation – said “expected returns do not economically support making investments required under the combined impact of the regulations” and would “cease production at its facilities in the North Sea prior to 2030”.

Apache chief executive John Christmann said this timescale was “well ahead of what would have been an otherwise reasonable timeframe”.

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.”

Scottish Conservative shadow energy and net zero secretary Douglas Lumsden MSP said: “This is a devastating blow for the North East and jobs in the oil and gas sector.

“Labour have shamefully abandoned the industry and are risking tens of thousands of jobs with their reckless decisions in their Budget.”

SNP economy spokesperson Dave Doogan MP said: “The Labour Party have put our skilled offshore workforce at risk and are actively draining investment, risking our energy security and our ability to hit net-zero – it’s potentially the worst of all worlds.”

Apache took control of the Forties field in 2003 but suspended all new drilling last year.

Latest accounts show the group had 634 workers on its North Sea operations at the end of 2022.

In summer 2023 it cut around 30 jobs, followed by a volunteer redundancy programme in the winter.

Yesterday, the firm said it now employs “more than 490 office and offshore/operating staff in the North Sea”.

The increase in the Windfall Tax confirmed at the October 30 Budget means the headline tax rate for oil and gas activities will hit 78 per cent – one of the highest in the world.

In a further blow to the industry, a 29 per cent “investment allowance” break on the Windfall Tax – where firms can cut tax by investing – was scrapped.

The Energy Profits Levy was first brought in at a rate of 25 per cent by the Tory government in 2022 following rocketing energy prices caused by Russia’s invasion of Ukraine.

A UK Government spokesperson said: “We are committed to making the UK a clean energy superpower, with both public and private investment required to support the transition, enhance energy security, and provide sustainable jobs of the future.”