A spokesperson for Harbor Energy has revealed to Rigzone that the company expects to cut around 350 onshore jobs in its UK business unit.
“[On Wednesday]we informed our colleagues and staff forums about the scale of the impact of our review of the UK organisation,” the spokesperson said.
“When we announced the review in January, we said that as a result of the Energy Profits Levy (EPL), which translates into an effective tax rate of 75 per cent in the UK, regardless of the level of oil prices and of gas to the market. or we have realised, we have had to reassess our future level of activity in the UK. In our annual results in March, we explained that this would “lead to a significant reduction in our UK workforce “, the spokesperson added.
“[On Wednesday] we have confirmed that we expect to have around 350 fewer jobs in our UK business unit, from a baseline of approximately 1,200,” the spokesperson said.
Harbor Energy’s representative told Rigzone that the company is working hard to mitigate the impact of this reduction, “for example, a hiring freeze (except for safety and business critical roles) and the “opening of a voluntary redundancy plan”.
The spokesman said the cut figures do not include UK-based business and international roles, “which are still being reviewed”. They also do not include the company’s offshore organization, “where we expect the impact to be significantly less”, the spokesman stressed.
“We are very aware of the impact of this news on our people, and we are conducting the review fairly and with consideration for all those affected,” said the Harbor Energy spokesperson.
When Rigzone asked HM Treasury (HMT) for a comment on Harbor Energy’s statement, a spokesperson for HMT said: “The EPL strikes a balance between funding cost of living support from excess benefits while encourages investment to strengthen the UK’s energy security.”
“We’ve been clear that we want to encourage the reinvestment of profits from the sector to support the economy, jobs and our energy security, so the more a business invests in the UK, the less tax it pays,” he said the spokesperson added
In a policy paper published on its site on March 15, the UK government highlighted that the EPL was introduced from May 26, 2022, “to tax the exceptional profits of oil and gas companies that operate in the United Kingdom and the UKCS”.
“To maintain the incentive for companies to invest in oil and gas production to support the UK’s energy security, the EPL included a[n] … 80 percent rebate against tax based on investment expenditure,” the policy paper stated.
The tax was due to expire on 31 December 2025, but in the Autumn Statement the UK Chancellor of the Exchequer announced changes to the EPL, including an extension to 31 March 2028, according to the document Other changes include an increase in the rate from 25% to 35% and the reduction of the investment allowance rate to 29% for all non-decarbonisation investment expenditure, the document said.
The chancellor also announced that from 1 January 2023 qualifying investment expenditure for upstream decarbonisation will be eligible for a higher expenditure allowance of 80 per cent, instead of the endowment of 29 percent, the document notes.
Harbor Energy describes itself as the largest independent oil and gas company listed in London “with a leading position in the UK as well as interests in Indonesia, Vietnam, Mexico and Norway”. The company has around 1,800 employees worldwide and gets 90 percent of its global production of 208,000 barrels of oil equivalent per day from the UK, according to its website, which highlights that five of the 10 fields largest in the UK are in the company’s portfolio.
To contact the author, please send an email andreas.exarcheas@rigzone.com
