Harbour Energy Expects to Cut Around 350 Onshore Jobs

A Harbour Energy spokesperson has revealed to Rigzone that the company expects to cut around 350 onshore jobs in its UK business unit.

“[On Wednesday], we briefed our colleagues and staff forums on the scale of the impact of our UK organization review,” the spokesperson said.

“When we announced the review in January, we said that, as a result of the Energy Profits Levy (EPL), which results in an effective tax rate of 75 percent in the UK regardless of the level of oil and gas prices in the market or realized, we have had to reassess our future activity level in the UK. At our full year results in March, we explained 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 onshore jobs in our UK business unit, from a baseline of approximately 1,200,” the spokesperson went on to state.

The Harbour Energy representative told Rigzone that the company is working hard to mitigate the impact of this reduction, “by, for example, a recruitment freeze (excepting safety critical and business critical roles) and opening a voluntary redundancy scheme”.

The spokesperson said the cut figures do not include UK-based corporate 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 lower”, the spokesperson outlined.

“We are very conscious of the impact of this news on our people, and we are carrying out the review fairly and with consideration for everyone who is affected,” the Harbour Energy spokesperson stated.

When Rigzone asked HM Treasury (HMT) for comment on Harbour Energy’s statement, a HMT spokesperson said, “the EPL strikes a balance between funding cost of living support from excess profits while encouraging investment in order to bolster the UK’s energy security”.

“We have been clear that we want to encourage reinvestment of the sector’s profits to support the economy, jobs, and our energy security, which is why the more investment a firm makes into the UK, the less tax they will pay,” the spokesperson added.

In a policy paper posted 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 operating in the UK and on 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 allowance against the levy based on investment expenditure,” the policy paper stated.

The tax was due to expire on December 31, 2025, however, at the Autumn Statement, the UK Chancellor of the Exchequer announced changes to the EPL, including an extension to March 31, 2028, the paper outlined. Other changes included a rate increase from 25 percent to 35 percent and the reduction of the rate of the investment allowance to 29 percent for all investment expenditure other than in decarbonization, the paper pointed out.

The Chancellor also announced that, from January 1, 2023, qualifying investment expenditure on decarbonization of upstream production will be eligible for a higher expenditure allowance at 80 percent, instead of the 29 percent allowance, the paper noted.

Harbour Energy describes itself as the largest London-listed independent oil and gas company “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 208,000 barrels of oil equivalent per day production from the UK, according to its website, which highlights that five out of the 10 largest UK fields are in the company’s portfolio.

To contact the author, email andreas.exarheas@rigzone.com