The North Sea’s biggest oil and gas producer is planning a raft of job cuts in response to the windfall tax, as the backlash to the new levy intensifies.
Harbour Energy has told staff about its redundancy plans, with jobs set to be cut from its headquarters in Aberdeen.
City A.M. understands that the extent of the firing spree, first reported by Reuters, is yet to be determined and will be subject to consultations.
Harbour recently pulled out of the latest licensing round for future North Sea exploration and development, concerned over the domestic investment climate.
This follows Chancellor Jeremy Hunt hiking the Energy Profits Levy (EPL) 10 percentage points last November, raising the windfall tax on North Sea oil and gas operators from 25 to 35 per cent.
The levy comes on top of the 40 per cent special corporation tax domestic fossil fuel producers already pay – taking the overall tax take to 75 per cent.
City A.M. understands that Harbour is also looking to restructure after several ownership changes in recent years to make the business operations more coherent.
When approached for comment on the planned job cuts, Harbour explained that the latest developments did not mean it was abandoning any current projects but it was reassessing future plans.
“Following changes to the EPL, we have had to reassess our future activity levels in the UK,” a spokesperson for Harbour told City A.M.
“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,” the spokesperson added.
The North Sea recently enjoyed a fresh boost from the figures in the latest licensing round, with the number of bids clocking in at comparable numbers to the previous auction process in 2019 – despite fears firms would back out from exploration after the windfall tax was toughened.
However, Harbour is not the only firm smarting from the levy, with Total Energies recently confirming it will have to fork out £810m ($1bn) in the fourth quarter from UK windfall taxes.
Total has also slashed £100m from its North Sea investment plans and will no longer proceed with an infill well on Elgin in 2023 as planned.