Oil giant Harbour Energy axes 350 jobs as windfall tax takes toll
Oil giant Harbor Energy is cutting 350 jobs and shifting investment away from the UK as windfall tax takes its toll
Harbor Energy will cut 350 jobs as it pulls investment away from the UK over windfall taxes on industry.
The Scottish company, the largest oil and gas producer in the North Sea, said last month its profits had been ‘virtually wiped out’ by the levy.
It has now told staff that 350 onshore jobs will disappear, mainly in Aberdeen.
Harbor Energy has said 350 onshore jobs will disappear, mainly in Aberdeen.
Prime Minister Rishi Sunak introduced a 25 percent profit tax on the industry when he was chancellor, as energy prices soared after Russia’s invasion of Ukraine in February 2022. This was later increased to 35 percent.
Port boss Linda Cook said the tax, which effectively imposes a 75 per cent corporate tax rate on North Sea profits, had a “disproportionate impact” on UK-focused oil and gas companies.
Harbor reported an after-tax profit of just £6.7m last year, down from £85m in 2021, due to what she said was a £1.3bn levy related to the windfall tax.
Yesterday it said: ‘Due to the levying of energy profits, which results in an effective tax rate of 75 per cent in the UK, regardless of the level of oil and gas prices on the market or realised, we have had to reassess our future level of activity. in the United Kingdom.
“With our annual results in March, we explained that this would lead to a significant reduction in our UK workforce. We are working hard to reduce the impact of this. We are very aware of the impact of this news on our people and we are conducting the assessment fairly and with consideration for all concerned.”
Energy company Enquest also took a swipe at the windfall tax, suggesting the levy caused delays at its production site in the North Sea.
The company said it would hold back further drilling in 2023 because of the higher tax rate that would change investment economics. Amjad Bseisu, CEO of Enquest, said: ‘Without energy profit tax, that would have been economic. But we probably need a third more volume to make it economic now because we’re burdened with a third of the cash flow going to levy.”
A Treasury spokesman said: ‘The tax on energy profits strikes a balance between financing the cost of living and encouraging investment to strengthen the UK’s energy security.
“It has been clear to us that we want to encourage reinvestment of the industry’s profits to support the economy, jobs and our energy security. Therefore, the more investments a company makes in the UK, the less tax they will pay.’