The boss of the largest London-listed independent oil and gas company today warned the UK Government to "carefully consider" the consequences of any changes it may make to the controversial energy profits levy.

Linda Cook, chief executive of Harbour Energy, was commenting following reports in recent days that Tory politicians are preparing to unleash a second round of windfall taxes on North Sea oil and gas producers as part of their cash-raising plans.

It is understood that the levy on offshore operators could be raised from 25% to 30% and extended by three years to 2028. Officials have also been working on plans to widen the windfall tax to include electricity generators.

Ms Cook's comments came as she gave a trading update for the first nine months of 2022.

She said: "The recently-enacted UK energy profits levy (EPL) and speculation about further fiscal changes have created uncertainty for independent oil and gas companies like Harbour.

"As a result, evaluating expected returns from long-term investments has become more difficult and investors are advocating for geographic diversification."

Consequences

"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 EPL.

"At a time when oil and gas producers are being asked to invest more to help ensure the UK's energy security, and are considering longer-term, material investments in carbon capture and storage, additional taxes would run the risk of undermining our ability to do either."

Harbour said it had achieved revenues of $4.1billion (£3.61billion) in the January-September period.

It also revealed that its total UK tax liability for this year is expected to be around $900million (£792million), of which about $400million (£352million) relates to the EPL.

Daily production for the first nine months of the year was 207,000 barrels of oil equivalent - up 27% year on year.

The CEO said: "Harbour is delivering operationally with higher production volumes and lower costs, supported by improved efficiency and our capital-investment programme."

Carbon capture and storage

"We also remain focused on reducing our own greenhouse-gas emissions and advancing our two UK carbon capture and storage opportunities - Harbour-led Viking CCS in England and Acorn in Scotland.

"Our company is proud to be the UK's largest oil and gas producer and, through the combination of these activities, contributing meaningfully to domestic energy security while at the same time working to help realise a shared ambition of UK leadership in CO2 capture and storage."

Trade body Offshore Energies UK said earlier this week it wants an urgent meeting with Chancellor Jeremy Hunt ahead of this month's Budget.

OEUK chief executive Deirdre Michie said that "ongoing uncertainty and continuous changes to the fiscal regime are driving investment out of the UK and also encouraging some companies to exit the basin".

She added: "Companies are unable to plan future long-term investments under such uncertain conditions and shareholders, particularly in overseas-headquartered companies, see an increasing risk premium regarding the future of their operations in the UK.

"There is clear evidence that fiscal stability drives investment into the North Sea, and fiscal uncertainty drives investment away from it."

Widespread dismay

The first round of the windfall tax announced in May led to widespread dismay in the industry, amid fears that the multi-billion-pound cash grab could see major investments put on hold or even cancelled.

A new, much-heavier financial burden would certainly increase these worries significantly - especially in Aberdeen, the oil capital of Europe, where the pain in terms of less spending and lost jobs is likely to be felt worst.

North Sea oil and gas producers are also puzzled as to why the UK Government is continuing to target the sector with ever-higher cash demands while the country's banking sector continues to escape scot-free.

It appears there are still no plans for a levy on the bumper profits of bankers benefiting from rises in the interest rate.

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