Harbour Energy blames UK government’s windfall tax for job cuts, despite £1 billion profit
A major North Sea oil and gas operator says the UK government’s windfall tax means it will have to cut jobs at its head office.
Harbour Energy is the largest offshore producer in UK waters, and says the tax means it will have to reduce staff at its head office in the Scottish city of Aberdeen.
The number of cuts has yet to be revealed, but staff have been told of the company’s plans.
The final proposals would be subject to consultation, according to the spokesperson.
A statement from the company given to Reuters said: “Following changes to the EPL, we have had to reassess our future activity levels in the UK… As such, we have initiated a review of our UK organisation to align with lower future activity levels.
“We will continue to support investment on the many attractive opportunities within our existing portfolio, but we are scaling back investment in other areas such as new exploration licensing.”
The company reported a profit after tax of nearly $1 billion in the first half of 2022, compared with $87 million a year earlier.
Because of the 40 percent corporation tax charge already applied, the effective tax rate is 75 percent, but the levy provides some investment relief.
Despite this, Harbour announced in December it would review its capital allocation plans and avoid a North Sea oil and gas licencing round.
At the time, the company stated that it would concentrate on expanding its existing portfolio.
When the COVID pandemic struck, oil and gas giants such as Shell and BP suffered tens of billions of dollars in losses as raw energy prices fell to historic lows.
Prices recovered as economies gradually recovered and demand outstripped supply.
Wholesale gas prices, on the other hand, later reached massive highs as supplies were squeezed as a result of Russia’s war in Ukraine and the subsequent Western sanctions imposed on Moscow for its invasion.
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The record profits enjoyed by big oil and others put a target on their backs, with countries such as the UK imposing windfall taxes to try to offset some of the pain inflicted on households and businesses by record bills.
Mr. Hunt also familiarized a 45 percent levy on electricity generators.
The government estimates its windfall taxes, as well as the energy profits levy, will raise £14bn combined in 2023.
Source: Sky News