Harbour Energy to cut 250 jobs in Aberdeen and review CCS

T. Schneider / Shutterstock.com

THE UK’s largest oil and gas producer is cutting 250 jobs in Aberdeen and reviewing its support for the Viking CCS project, blaming the government’s fiscal rules and regulations.

Scott Barr, managing director of Harbour Energy’s UK business unit, said: “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.”

The government introduced a windfall tax called the Energy Profits Levy in 2022 which raised the tax on upstream oil and gas activities to 65%. This has been extended and now stands at 78%.

The offshore trade group OEUK has warned that without changes to fiscal rules, the North Sea industry’s “resources, capability and hard-earned expertise will move overseas”.

OEUK CEO David Whitehouse said: "We must support our own workforce, with measures including issuing new oil and gas licences, enabling renewable projects and ending the Energy Profits Levy.”

Whitehouse said that the decisions stemming from the government’s recent consultation on the future of North Sea energy and the long-awaited industrial strategy are needed urgently.

“The decisions made will shape our industry and economy for decades to come,” Whitehouse said. “We must get them right.”

In March, the government announced that the levy will be cancelled, but not until 2030, and launched a consultation on how to tax industry in the future in response to price shocks.

It also confirmed it would issue no licences to explore for new oil and gas fields as it seeks to transition the UK to clean energy and achieve net zero emissions by 2050. As part of the managed decline of the oil and gas industry it wants to harness the existing infrastructure and skills to deploy hydrogen, CCS and renewables.

OEUK has said that the UK should double gas production from existing resources to improve energy security and support industry. While oil and gas are traded on the open market, it has argued that a higher level of domestic supply should push down prices and reduce dependency on imported natural gas.

Furthermore, it has warned that if the UK loses the supply chain for oil and gas, it will hinder the country’s ability to support a ramp-up in renewables.

CCS under review

Reacting to the job losses, a UK government spokesperson said: “Our thoughts are with any workers affected by this commercial decision, and we will do everything in our power to support workers and communities.”

They added that launching a CCS industry after years of delays by the previous government plus consenting new nuclear and renewables, will grow the economy and increase energy security.

Despite this, Harbour Energy says it is reviewing its involvement in CCS because of the government’s slow decision-making on the second phase of its CCS demonstration programme.

Barr said: “We are also reviewing the resourcing required to support our Viking carbon capture and storage project [in the Humber region], where progress beyond front-end engineering design and the recent securing of a Development Consent Order has been hindered by repeated delays to the government’s Track 2 process.”

Last year, Harbour Energy pulled out of its partnership with Synergia Energy to develop a CCS scheme in the North Sea called the Medway Hub Camelot project.

Yesterday, the government’s clean energy mission suffered a blow when Ørsted, the developer of the huge Hornsea offshore wind project, announced it had shelved the fourth phase of the project which would have added 2.4 GW of capacity.