OEUK responds to Harbour Energy job cuts: windfall tax will always undermine investment

World Oil Staff January 18, 2023

(WO) — Reuters has reported that Harbour Energy, the North Sea's biggest oil and gas producer, has told staff it plans job cuts, linked to the windfall tax imposed on the UK sector last year. The jobs would be cut in Harbour Energy's headquarters in Aberdeen.

Mike Tholen, sustainability director at Offshore Energies UK, which represents 400 companies involved in producing energy from oil, gas and offshore wind, in UK waters, said the windfall tax was always likely to undermine investment.

“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 make it far more likely that investors will look overseas instead.

“This matters because the UK gets 75% of its total energy from oil and gas. We have 32 million vehicles relying on petrol or diesel plus 23 million homes reliant on gas for heating. We also get 42% of our electricity from gas-fired power stations.

“Our members produce 40% of the nation’s gas, and so are essential to the nation’s prosperity and energy security but we can only maintain that kind of output by constant investment. If we don’t invest, then production will decline and leave us increasingly reliant on imports. The global energy crisis caused by Russia’s invasion of Ukraine shows how risky that could be.

“We now need the government to help rebuild confidence so that the offshore industry can continue to provide energy for consumers as well as building the low-carbon energy systems of the future.”

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