Harbour Energy’s decision will send shock waves through the UK offshore industry
One of the UK’s largest oil and gas producers has been forced to cut 250 jobs in Aberdeen, blaming the Government’s windfall taxes for making the Britain’s energy industry unprofitable.
Harbour Energy, which operates in the North Sea, said a review of its operations would lead to the loss of 250 onshore roles – equal to 25pc of its workforce.
In a clear warning to Ed Miliband, the Energy Secretary, Scott Barr, the company’s managing director, also said that Harbour could pull out of two carbon capture projects that are crucial to the UK’s net zero ambitions.
The announcement will send shock waves through the UK offshore industry and Aberdeen.
Harbour Energy provides roughly 15pc of the UK’s oil and gas – making it vital to national energy security. Through its supply chain, the company is also one of north-east Scotland’s key job generators.
“The review is unfortunately necessary to align staffing levels with lower levels of investment, due mainly to the Government’s ongoing punitive fiscal position and a challenging regulatory environment,” Mr Barr said.
“Harbour remains among the largest producers in the UK North Sea and, while our dedicated and highly skilled people will continue to produce vital energy safely and responsibly, we must take these difficult steps in response to the challenges presented by the current external environment.”
Successive governments have taken aim at the North Sea, with the last Conservative administration imposing a 75pc windfall tax in 2022, and Labour raising that to 78pc last year.
The windfall tax meant Harbour swung from a near $1bn profit to an $8m (£6.3m) loss last year. The UK tax changes meant Harbour was paying an effective tax rate of 102pc.
The industry was hit by a further blow last year when Mr Miliband banned further exploration for new oil and gas fields – even though the UK is spending billions of pounds a year importing fossil fuels.
Harbour’s moves also threaten plans to build a CO2 capture and storage industry.
The company is a key partner in the Humber-based Viking project to transport and store 15m tonnes of CO2 a year in the North Sea’s Southern Gas Basin.
It is also involved in Scotland’s Acorn project to store at least 5m tonnes of CO2 per year by 2030.
Mr Barr criticised the Government’s slow progress and warned that Harbour could pull out of such schemes.
“We are also reviewing the resourcing required to support our Viking carbon capture and storage project, where progress beyond front-end engineering design and the recent securing of a Development Consent Order has been hindered by repeated delays to the Government’s process,” he said.
Harbour is one of the UK’s largest producers of oil and gas with operations in multiple North Sea fields including Greater Britannia, J-Area, AELE, Catcher and Tolmount, plus stakes in several others operated by different companies.
It produced oil and gas equivalent to 175,000 barrels of oil every day in 2023, but as the windfall taxes hit home, it slashed investment in new fields – resulting in production last year falling to 149,000 barrels.
A government spokesman defended the windfall tax, saying: “The Government has reformed the energy profits levy [windfall tax] to support investment and give industry certainty and stability.
“By making the UK a clean energy superpower, including launching a world-leading carbon capture and storage industry after years of delay, consenting record amounts of clean power, and ending many years of no new nuclear, we will get the UK off dependence on markets controlled by petrostates and dictators, and drive jobs and growth through our Plan for Change.
“Our thoughts are with any workers affected by this commercial decision, and we will do everything in our power to support workers and communities.”
Andrew Bowie, shadow energy spokesman, criticised the Government’s “insensitive” response.
“People are today being made unemployed. This is a tin-eared response from a Government in hock to climate extremist ideology and ignorant of the problems in the real world.
“Harbour is a principal player in the North Sea, employing around 1,000 people in Scotland.
“So this announcement, on the back of another 350 redundancies in 2023, must be seen as a pivotal moment for the future of British oil and gas.”
Richard Tice, energy spokesman for the Reform party, said: “The tragic oil and gas job losses in Scotland have been sacrificed on the altar of net stupidity zero. Labour does not care. Reform are the party of workers and common sense [that] will stop this nonsense. Drill Scotland drill.”
Robin Allan, chairman of Brindex, a trade body for independent offshore operators such as Harbour, said: “Successive governments have used the UK oil and gas industry as a cash cow rather than a national asset.”
Russell Borthwick, the chief executive of Aberdeen & Grampian Chamber of Commerce, said UK policies on fossil fuels were destroying a world-class British industry.
“The UK currently has a crippling 78pc tax on North Sea oil and gas, all while importing record levels of foreign energy – with higher emissions – tax free,” he said.
“The result is 10,000 North Sea jobs lost since the windfall tax was introduced in 2022. It is a national scandal which threatens job losses on a scale not seen in decades.”
