The UK’s largest oil and gas producer, Harbour Energy, is cutting investments and jobs after the new windfall tax on the industry sapped nearly all of its 2022 profits.
Harbour Energy’s profits last year were $2.5 billion, pre-tax, but after taxes, the company was left with just an $8 million profit—that’s after the $1.5 billion that needed to go towards the Energy Profits Levy.
Harbour Energy has not divulged how many workers will lose their jobs.
Harbour Energy said it has cut back on investments, too, with Harbour choosing not to move forward on two drill sites and declining to participate in the North Sea offshore licensing round.
The windfall tax has hit UK North Sea producers, many which have already announced reduced investments on the UK Continental Shelf, the new head of trade body Offshore Energies UK said last month.
The UK raised the windfall tax on oil and gas operators’ profits last autumn by 10 percentage points, to 35 percent. The increased rate for the Energy Profits Levy went into effect on January 1 of this year. It was also extended into March 2028, from December 2025.
The additional levies increased the total tax rate on oil and gas companies to 75 percent00the highest of any industry in the UK.
Shell has said it is reevaluating all of its UK projects which make up $30 billion of investments, and TotalEnergies has also said it would cut investments in the UK by 25 percent.
Oil and gas companies saw a substantial increase in profits last year thanks to higher oil and gas prices amid geopolitical turmoil and tight markets.
By Julianne Geiger for Oilprice.com
More Top Reads From Oilprice.com:
Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.