Harbour Energy is to wind down its North Sea investments - Andrew Milligan/PA Wire

Britain’s biggest oil and gas producer is axing investment in the UK and diverting cash to countries including Norway after Labour’s windfall taxes left it with an 111pc tax rate.

Harbour Energy plans to wind down its North Sea investments and has already announced 250 job losses in Aberdeen, a city once regarded as the oil and gas capital of Europe. On Thursday, a spokesman said the company would consider offering jobs in its overseas operations to suitable workers but most of the Aberdeen staff marked for redundancy would be leaving the company.

It came as Harbour report half-year results that made clear the impact of the energy profits levy, or windfall tax, which was initially imposed by the Conservatives and increased under Labour.

Harbour made a profit before tax of $1.6bn (£1.2bn) but faced a tax bill of $1.8bn, resulting in a post tax loss of $174m. This was largely down to UK windfall levies plus foreign exchange transactions.

The report said: “The effective tax rate for the six months ending on June 30 2025 was 111pc, compared to 85pc for the same period in 2024.”

The company said the increase was “primarily” down to a deferred tax charge resulting from Labour’s decision to extend windfall taxes to 2030.

Linda Cook, Harbour’s chief executive, said: “[The UK] remains a challenging environment for us... the fiscal regime means investment here just finds itself hard to compete with the opportunities we have in other countries.

“Going forward, we do expect investment to decline in the UK, given the fiscal and regulatory conditions. We will still have some high return opportunities, but overall investment is likely to decline and will be replaced by investment in Norway, Argentina and, over time, Mexico.

“The UK is one of our highest countries for unit operating costs ... and it’s one of our highest tax environments as well. So that [UK] production will get replaced over time with production from other countries, and that’s a good thing for us overall.”

Last week, Donald Trump said Britain was wasting a “treasure chest” of oil and gas. He wrote on his Truth Social site: “The taxes are so high, however, that it makes no sense. They have essentially told drillers and oil companies that, ‘We don’t want you.’”

The US president said reopening the North Sea could deliver a “vast fortune” for the UK and “far lower energy costs for the people!”

Harbour was a primarily UK-focused oil and gas producer but has shifted its focus as successive governments imposed ever-tougher windfall taxes and climate-related drilling restrictions.

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Last year the company acquired the upstream operations of Germany’s Wintershall Dea, giving it production centres in Norway, Argentina, Germany and Mexico.

The move tripled output to 475,000 barrels of oil a day compared to the 159,000 seen in the first half of 2024, with reserves also tripled at an estimated 1.3 billion barrels.

The company still operates several oil and gas production hubs in UK waters. Investment is focused on two of them, J-Area and Greater Britannia Area, in the central North Sea.

However, Ashley Kelty, an analyst at Panmure Liberum investment bank, said Harbour had permanently shifted its focus from the UK to other parts of the world.

Harbour also published an “adjusted profits” figure discounting the impacts of windfall taxes, showing underlying profits of $410m, and announced a $100m share buyback programme alongside a $455m dividend for shareholders.

Dan Slater, an analyst at Zeus Capital, said Harbour had shown a strong underlying performance, despite the tax hits.

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