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Harbour Energy’s boss has hit out at the UK’s move to raise windfall taxes on oil and gas producers, warning it had dealt a further blow to the country’s attractiveness to investors in a sector she said would remain vital to the economy for decades to come.
Linda Cook, a critic of the UK’s energy profits levy when it was introduced by then chancellor Rishi Sunak in 2022, has largely avoided talking about the issue in recent months, even as industry peers attacked the Labour government for raising it and seeking to remove investment allowances for companies.
But she said “the hurdle to attract investment in the UK” was now going to be higher, and that “the fiscal regime in a lot of the other countries — in all of the other countries — in which we will have a presence will be more attractive” than the company’s home market.
“The thing I scratched my head about the most,” she told the Financial Times, was that “everyone understands that the UK will need oil and gas for many years to come, so why don’t we seem to want to use our own? It is better for investment, for energy security, for tax revenues, balance of trade and emissions.”
The Labour government announced over the summer that the UK energy profits levy would rise by 3 percentage points from November, taking the overall tax rate on the sector to 78 per cent. It also extended the levy by a year to 2030 and removed allowances that allowed companies to offset investment spending against their tax bill.
Cook’s comments came in a week when Norwegian-owned peer Neo Energy said it would slow investments in the UK because fiscal policy made projects uneconomical, and industry body Offshore Energies UK warned rises to the windfall tax would cost the economy £13bn in the second half of the decade.
Harbour on Tuesday completed an $11.2bn takeover of Wintershall Dea’s oil and gas assets from German chemicals company BASF, turning the UK-based company into an international participant with a presence in countries from Argentina to Norway.
Harbour’s biggest ever deal will reduce its dependence on the UK North Sea to about a third from roughly 90 per cent, although it will remain the area’s biggest UK producer.
The transaction, announced in December, was complicated by the involvement of a part owner of the assets, investment firm LetterOne, that is backed by Russian oligarchs Mikhail Fridman and Petr Aven, who are subject to western sanctions.
Cook said she was excited about acquiring assets in Norway, which she had once believed was out of Harbour’s reach, and that the company still had the firepower to do more deals as oil majors became “motivated sellers” of assets after concluding their own mega deals.
The deal has transformed Harbour, which had no production when it was founded in 2014, into a company that will dwarf UK North Sea independent producers and will instead count among its competitors Norway’s Aker BP
and Houston-based Marathon Oil, which has agreed to be bought by ConocoPhillips.
Cook said the deal would more than double the company’s oil and gas output, from assets in Norway, Germany, Denmark, Argentina, Mexico, Egypt, Libya and Algeria.
A surge in dealmaking in the sector driven by consolidation in the US since late 2023 has led to deals including Chevron’s agreement to buy oil and gas producer Hess for $53bn and ExxonMobil’s acquisition of shale producer Pioneer Natural Resources for $64bn.
Asset sales by oil and gas majors could give Harbour an opportunity to repeat a growth strategy that turned it into a dominant participant among independent companies operating in the UK North Sea.
The upstart company bought assets valued at a combined $5.7bn from Shell and ConocoPhillips between 2017 and 2019. Similarly, its biggest deal was made possible by BASF’s desire to exit upstream oil and gas.
“There continue to be assets that become available from time to time from the major oil companies, especially after they’re digesting their own major acquisitions,” said Cook, a former Shell executive who spent almost three decades at the company. “There might be some opportunities coming from that.”
