The UK’s largest oil and gas producer has warned Rishi Sunak against toughening up the windfall tax on North Sea operators as the prime minister finalises plans for a £40bn raid on the industry.
Harbour Energy urged the government to “carefully consider” any mooted change to the energy profits levy, which was introduced earlier this year.
Sunak had hoped to raise £5bn from the windfall tax when he announced the levy in May, but Shell said last week it has paid zero windfall tax so far this year. BP’s huge profits announced this week prompted further calls for an increase.
Sunak and his chancellor, Jeremy Hunt, are now close to raising the tax rate from 25% to 30% and extending it by three years to 2028 and to cover electricity generators, the Times reported. They hope to raise an estimated £40bn over five years.
Harbour Energy chief executive Linda Cook said shareholders were pressing for the company to invest in other countries because of the “uncertainty” around the levy.
“Evaluating expected returns from long-term investments has become more difficult and investors are advocating for geographic diversification,” she said.
Cook added: “While we fully recognise the significant challenge in the UK to put public finances on a sustainable footing, we urge the government to carefully consider the consequences of any increase in or extension of the energy profits levy.”
She said that “additional taxes would run the risk of undermining our ability” to invest in measures to boost Britain’s energy security and spend on carbon capture storage projects.
Harbour is the biggest oil and gas producer in the UK and has carbon capture projects off the North Sea coast. It also has projects in Indonesia, Vietnam and Mexico.
Cook’s comments came as the company reported revenues of $4.1bn (£3.55bn) in the nine months to 30 September. Production rose 207,000 barrels of oil equivalent a day, up 27% on the same period a year earlier.
It expects its UK tax bill to be about $900m this year, including $400m relating to the energy profits levy. It has handed $500m to shareholders this year.
Cook, who was paid nearly £6m last year, wrote to Sunak earlier this year to argue that the windfall tax is “seriously flawed”.
Harbour shares rose 2% to 392p on Thursday, valuing the company at £3.38bn.