(Reuters) – U.S. President-elect Donald Trump called to “open up” the North Sea and get rid of windmills in a post on his social media platform Truth Social on Friday.
Oil companies have been steadily exiting the North Sea in recent decades with production declining from a peak of 4.4 million barrels of oil equivalent per day at the start of the millennium to around 1.3 million boed today.
Trump’s post was in response to a report about U.S. oil and gas producer APA Corp’s unit Apache’s plans to exit North Sea by year-end 2029. The company expects North Sea production to fall by 20% year over year in 2025.
In October last year, the British government said it would increase a windfall tax on North Sea oil and gas producers to 38% from 35% and extend the levy by one year. The government wants to use the revenue from oil and gas to raise funds for renewable energy projects.
Britain has a target to largely decarbonise its power sector by 2030 which will mean reducing its reliance on gas-fired power plants and rapidly increasing its renewable power capacity.
North Sea producers have warned that the higher tax rate could lead to a sharp drop in investments and are exiting from the ageing basin ahead of the new tax increases.
Top British North Sea producer Harbour Energy wants to sell stakes in North Sea oilfields and is reviving plans for a U.S. listing, Reuters has previously reported. U.S. oil major Exxon (NYSE:XOM) completed its exit from the North Sea region in July last year.
The North Sea has seen major wind farm development by Britain and European countries, but the rapidly-growing offshore wind sector has had a tough few years as costs ballooned due to technical and supply chain problems as well as higher interest rates, leading many companies to review investments.
Companies are reconsidering their investments in offshore wind, or have assumed impairments, due to the rising cost of developing wind farms that can be more than 100 kms (62 miles) offshore.
Orsted (CSE:ORSTED),the world’s biggest offshore wind farm developer, trimmed its investment and capacity targets last year.
This post is originally published on INVESTING.
