Oil and gas firm Harbour Energy blames job cuts on windfall tax
- Published
A North Sea oil and gas firm will cut jobs in Aberdeen, blaming the UK government's windfall tax on profits.
Harbour Energy said it is "reassessing its future activity levels" in the UK following an increase to the Energy Profits Levy (EPL) from 25% to 35%.
The firm has not confirmed how many jobs will go, but the vast majority of its UK employees are based in Aberdeen.
The Treasury says the EPL helps strengthen the UK's energy security amid a cost of living crisis.
The tax, which applies to profits made from extracting UK oil and gas, will remain in place until March 2028.
It had previously been scheduled to finish at the end of 2025.
A Harbour Energy spokesperson said: "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.
"As such, we have initiated a review of our UK organisation to align with lower future activity levels."
Harbour Energy made a pre-tax profit of $1.5bn, external (£1.3bn) in the first half last year, up from $120m (£972m) over the same period of 2021.
'Riskier place to invest'
Offshore Energies UK, which represents oil and gas producers, argued the windfall tax is undermining investment.
The organisation's sustainability director, Mike Tholen, said: "A year ago, the offshore energy operators were being taxed at 40% of profits and the UK had a reputation as a stable place to invest.
"Since then, we have had two tax rises and the operators are now being taxed at 75% - by far the highest of any UK industry. Some politicians are also proposing further tax rises and the removal of investment allowances.
"These tax increases, and the threat of more to come, have made the UK a much riskier place to invest and so makes it far more likely that investors will look overseas instead."
Chancellor Jeremy Hunt said during his Autumn Statement that he could support windfall taxes "if they are genuinely about windfall profits caused by unexpected increases in energy prices".
He added: "But any such tax should be temporary, not deter investment and recognise the cyclical nature of many energy businesses."
A Treasury spokesperson said: "The Energy Profits Levy strikes a balance between funding cost of living support while encouraging investment in order to bolster the UK's energy security.
"We have been clear that we want to encourage reinvestment of the sector's profits to support the economy, jobs, and our energy security, which is why the more investment a firm makes into the UK, the less tax they will pay."