The biggest producer of oil and gas in the North Sea has reported that the government’s energy profits levy (EPL) has “all but wiped out our profit for the year”.
Harbour Energy said it had “reduced our UK investment and staffing levels” and bolstered its aim to expand elsewhere as a result of the hit from the windfall tax.
It has become something of a political football during the cost of living crisis to date, with opposition parties accusing the government of not going far enough in its efforts to recover costs of its energy bill support for households and businesses from extraction companies.
The likes of Shell and BP have revealed record profits on the back of elevated oil and gas prices due to the war in Ukraine.
Harbour had warned in January that it was to make head office workers in Aberdeen redundant in direct reaction to the hike in the levy, announced by chancellor Jeremy Hunt in November last year.
It took the EPL rate to 35% from 25% but the decision took the effective tax rate on North Sea profits to 75% because of the 40% corporation tax charge already applied.
However, some investment relief is granted under the levy.
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Harbour said its profits after tax for 2022 came in at $8m (£6.7m) due to a “$1.5bn one off non-cash deferred tax charge associated with the EPL”.
Shareholder distributions of $553m were made during the year and it proposed a $100m final dividend which marked a 9% increase in awards during the year.
Chief executive Linda Z Cook said: “The UK Energy Profits Levy, which applies irrespective of actual or realised commodity prices, has disproportionately impacted the UK-focused independent oil and gas companies that are critical for domestic energy security.
“For Harbour, the UK’s largest oil and gas producer, it has all but wiped out our profit for the year.
“This has driven us to reduce our UK investment and staffing levels.
“Given the fiscal instability and outlook for investment in the country, it has also reinforced our strategic goal to grow and diversify internationally.”
