Oil & Gas

05 Sep 2023

North Sea Oil and Gas Giants in £260M Deal

05 Sep 2023  by   
TWO of the North Sea’s biggest operators have agreed a £260m tie-up to boost oil and gas production.

Harbour Energy and engineering giant Wood Group signed ‘a new strategic partnership’ that will support hundreds of jobs and lead to further recruitment next year.

Steve Nicol, Wood’s executive president of operations, said the deal will ‘ensure the UK continues to have the energy mix it needs’ as it moves to a greener future.

The investment comes at a turbulent time for the UK oil and gas industry, with firms cancelling projects and cutting jobs and investment in the face of a punishing windfall tax on profits.

The levy, introduced by then-Chancellor Rishi Sunak in 2021 under pressure from opposition MPs, was established as the industry raked in record profits due to rocketing oil and gas prices. It was designed to fund support for households struggling with soaring bills.

However, critics of the policy say it unfairly impacts smaller producers and curtails new investment and job creation, particularly as energy prices have fallen from the peaks hit after the invasion of Ukraine.

Harbour - a vocal opponent of the levy, which takes corporation tax in the North Sea to 75pc - last month reported a £6m loss for the first half of the year having made profits of nearly £800m in the same period of 2022.

The group, which supplies around 15pc of Britain’s domestic oil and gas, blamed the slump on declining energy prices and the windfall tax. The levy cost the FTSE 250 company £240m in the period.

Meanwhile, rival Ithaca Energy said last month it had cancelled projects and cut production as a direct result of the levy. It said lower investment due to the levy would lead to a 6pc fall in production next year.

However, the Government said in June that the windfall tax will be cancelled before the planned date of March 2028 if oil prices drop below $71.40 per barrel and gas prices below 54p per therm for two consecutive three-month periods.

The five-year strategic partnership announced yesterday will see Wood provide engineering, procurement and construction services to Harbour as well as operations and maintenance for ‘a number of Harbour’s offshore assets critical to UK energy security’.

Among the assets included in the partnership are Harbour’s J-Area, Greater Britannia Area, Solan and AELE (Armada, Everest, Lomond and Erskine) hubs.

Audrey Stewart, vice president of supply chain at Harbour, said: ‘This contract is an important step forward in establishing our suite of long-term strategic partnerships across our North Sea assets.’


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