Windfall tax has ‘all but wiped out our profit for the year’, biggest North Sea oil producer says

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” as a result of the hit from the windfall tax, which has become something of a political football during the cost of living crisis to date.

The company 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%, as the government sought to recover some of the cost of its energy bill support for households and businesses from extraction companies benefiting from elevated prices because of the war in Ukraine.

The decision took the effective tax rate on North Sea profits to 75% because of the 40% corporation tax charge already applied though some investment relief is granted under the levy.

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.