UK’s Top Oil Producer To Cut Jobs Over Windfall Tax

The largest oil and gas producer in Britain’s North Sea, Harbour Energy, will reportedly move to cut jobs as a result of the UK’s windfall tax, Reuters reported exclusively, citing company sources. 

While the number of cuts coming remains undetermined, Reuters said the company, which employs 1,700 people, had confirmed that cuts would be made at the headquarters in Aberdeen, Scotland. 

"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," the company said in a statement to Reuters.

While the initial news saw shares in Harbour Energy (HBR.L) shed some 0.3% early on Wednesday, those losses had been recouped by 11.00 a.m. EST, with the stock trading up 0.09%.

In November, the new UK government of Prime Minister Rishi Sunak raised the windfall tax on the profits of oil and gas operators in the North Sea. The initial windfall tax was implemented in May last year, when Sunak announced a temporary 25% Energy Profits Levy intended to represent extraordinary profits as oil and gas prices surged. In November, that levy was increased by 10 percentage points to 35% beginning on January 1, 2023. The levy will extend to March 2028. 

Sunak’s government said it expected the levy to bring in over £40 billion by 2027-28.

The hike in the levy lifted total oil and gas taxation in the UK to a grand total of 75%, Bloomberg’s energy and commodities columnist Javier Blas noted.

Harbour Energy’s job cut announcement follows announcements last month that it would be reviewing future spending and would not be taking part in a new North Sea licensing round, saying it would be scaling back exploration investing, Reuters reported. 

By Charles Kennedy for Oilprice.com

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