Harbour Energy, the largest independent oil and gas firm in the North Sea, has announced it will cut approximately 250 onshore jobs in Scotland, a move that has raised concerns among local communities and politicians. The decision, which affects around a quarter of the company’s workforce based in Aberdeen, is attributed to the UK government’s "ongoing punitive fiscal position and a challenging regulatory environment."
Scott Barr, managing director of Harbour Energy’s UK operations, stated, "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." This announcement comes just two years after the company cut 350 onshore jobs from its Aberdeen office, indicating a troubling trend for employment in the sector.
In a recent statement, Harbour Energy reported a significant financial downturn, with losses after tax totaling $93 million last year, down from a profit of $45 million the previous year. The company cited a staggering 108% effective tax rate as a key factor contributing to its financial struggles. Barr emphasized the need for a review of operations, particularly regarding the Viking carbon capture and storage project, which has faced delays due to government processes.
Russell Borthwick, chief executive of the Aberdeen and Grampian Chamber of Commerce, described the job cuts as a "devastating blow" for the affected families and warned that this might just be the beginning unless government policies change. He pointed out that the UK currently imposes a crippling 78% tax on North Sea oil and gas, which he argues is detrimental to job security and investment in the industry.
During Prime Minister’s Questions on May 7, 2025, SNP Westminster leader Stephen Flynn raised the issue of the job losses, criticizing the government’s approach to energy policy. Flynn stated, "That’s 250 jobs in my constituency gone in the blink of an eye. And do you know who they blame, Mr Speaker? They blame the policies of the Labour Party." He invited Prime Minister Keir Starmer to visit Aberdeen and explain the government's priorities, particularly in contrast to its support for jobs in Scunthorpe.
The Energy Profits Levy (EPL), commonly referred to as the windfall tax, was introduced by the UK government in 2022 and has since been a point of contention for oil and gas producers. Initially implemented to address the soaring profits of energy companies amid the crisis in Ukraine, the tax has faced criticism for its impact on investment and job security in the North Sea. The tax rate was recently increased to 38% and is set to remain until 2030. Industry representatives argue that this tax regime has effectively stifled growth and innovation.
Harbour Energy has been particularly vocal against the EPL, claiming it has led to an unsustainable business environment. The firm’s financial reports indicate that it has paid more to the UK government than it has earned, highlighting the strain that the current fiscal policies have placed on its operations.
In light of these developments, the UK government has expressed its commitment to supporting affected workers and communities. A government spokesperson stated, "Our thoughts are with any workers affected by this commercial decision, and we will do everything in our power to support workers and communities." The government has also indicated that it is reforming the EPL to provide more stability and certainty for industry players.
However, the response from the industry suggests that these measures may not be sufficient. Borthwick warned that the situation could lead to further job losses, indicating that the cuts at Harbour Energy are just "the tip of the iceberg." He criticized the government for failing to create a conducive environment for the oil and gas sector, which he believes is crucial for the UK’s energy independence and economic growth.
As the situation unfolds, Harbour Energy is not alone in its struggles. Other firms in the North Sea have also reported job cuts and operational challenges, with many attributing their difficulties to the same punitive tax regime. The oil firm Apache has also announced plans to cease its North Sea production by the end of 2029, citing the windfall tax as a significant factor in its decision.
Despite the challenges, Harbour Energy continues to explore opportunities outside the UK. The company recently acquired German rival Wintershall Dea in an $11.2 billion deal, aiming to diversify its portfolio and reduce reliance on the North Sea. This strategic pivot reflects a growing trend among energy companies seeking stability in more favorable regulatory environments.
In conclusion, the job losses at Harbour Energy serve as a stark reminder of the ongoing challenges facing the North Sea oil and gas industry. With government policies under scrutiny and the future of energy production in the UK hanging in the balance, both workers and companies are left to navigate an uncertain landscape. The call for reform and a more balanced approach to taxation and regulation is louder than ever, as stakeholders seek to protect jobs and ensure the sustainability of the energy sector.
