The recently increased special profit tax for energy companies has caused the large North Sea oil producer Harbor Energy to reconsider its investment plans.

As the company announced, it will not bid for the new licenses for oil and gas fields.

The call for applications, which is the first since 2019, runs until mid-January.

The British government wants to use it to sell around 100 oil and gas licenses to the highest bidders.

Philip Pickert

Business correspondent based in London.

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Harbor Energy (formerly Chrysaor) has been the largest oil producer in the British North Sea since it took over the British oil fields of the US group Conoco-Phillips for almost three billion dollars three years ago.

Until recently, the share was listed in the leading index FTSE 100 of the London Stock Exchange.

However, the price has fallen by a good third since October, which has something to do with the lower oil price, but also with the new tax burden.

Treasury Secretary Jeremy Hunt has increased the special tax ("windfall tax") for energy companies to 35 percentage points.

Profits are now taxed at 75 percent.

In addition, the tax should run until 2028.

Overall, the special tax should bring the British tax authorities a good 40 billion pounds (46 billion euros) over this period, the Treasury Department estimates.

Shell's North Sea boss Simon Roddy accused Hunt at a meeting that the tax plans were based on price expectations that were too high.

Long-term effects on energy production

The industry association OEUK now said after Harbour's withdrawal: "This is exactly what we predicted as a result of the windfall tax." The tax was introduced to boost profits in the short term, but will have a long-term impact on energy production.

The French Totalenergies group had previously announced that it would cut its planned oil and gas investments in British North Sea waters by 25 percent or £100 million (around EUR 120 million).

Harbor CEO Linda Cook had warned Hunt before his budget speech that his tax plans would "drive investment completely out of Britain".

Around 20 companies, including other North Sea giants such as Itaca Energy and NEO Energy, wrote a warning letter to the Chancellor of the Exchequer.

The energy industry is pushing to end the special tax before 2028 if oil prices fall.

Hunt met in Edinburgh last week with heads of major energy companies such as Shell, Norway's Equinor (formerly Statoil) and Harbor to discuss the North Sea plans.

By issuing around 100 new licenses in Great Britain, the government wants to strengthen energy security and independence from imports.

Greenpeace has announced a lawsuit against the new award round.