Windfall tax all but wipes out North Sea oil giant’s £2bn profit

The North Sea’s biggest oil producer has warned it will be forced to cut staff and investment as it claimed its profits were all but wiped out Rishi Sunak’s windfall tax.

Harbour Energy was hit with $2.4bn (£2bn) of taxes – including $1.5bn from the so-called Energy Profits Levy – on pre-tax profits of about the same figure, leaving it with a profit after tax of just $8m.

Revenues from gas nearly doubled to $2.3bn while crude oil income was up 27pc to $2.8bn as energy prices surged following Russia’s invasion of Ukraine.

However, it expects “significant” job cuts in Britain and is reviewing its UK operations. The company first warned in January that the windfall tax meant it would be forced to reduce staffing, which industry sources said at the time was expected to be in the hundreds. It employs around 1,500 in the UK.

The company, which pumped more than 200,000 barrels of oil and gas a day last year, has said it will target growth abroad.

Linda Cook, chief executive 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.”

Despite its massive reduction in profits after tax, Harbour Energy announced on Thursday a new $200m (£169m) share buyback programme.

Added together with its $200m annual dividend policy, it brings total announced shareholder returns to $1bn (£840m) since December 2021.