Harbouring a different reality

Harbour Energy is not a household name, but its impact on household energy bills can't be understated. 

It is the biggest extractor of North Sea oil and gas, pumping out 200,000 barrels of oil a day.

But this week it claimed its profits were “wiped out” by the Windfall Tax introduced by the Government to help households suffering from spiralling energy bills this winter.

Not quite.

According to The Times, North Sea oil companies can “offset losses against future profits. These losses are known as a deferred tax position or asset. Harbour has written down the value of its deferred tax position 'to reflect the increase in our future tax rate in the period to March 2028’; in effect, recognising it will have to pay more tax than previously thought.”

So it isn’t the Windfall Tax that has wiped out the profits, but an accounting tactic devised by the company.

As if to prove it, the company posted results which confirm billions in free cashflow after tax payments and a further multi-million pound share buyback, which is corporate speak for having more money than you know what to do with. 

As Paul Monaghan, chief executive of the Fair Tax Foundation, said:

Harbour Energy’s contention that the windfall tax has ‘wiped out their profits’ is pure smoke and mirrors.

So why has Harbour Energy done this? 

Rather than playing their results with a straight bat, which would have revealed that the Windfall Tax could be extended further, they chose a spin approach to try and back up their previous lines that the Windfall Tax would be ruinous to the North Sea fossil fuel industry.

This is a case where maintaining the company spin became more important than being honest about profits, which would have driven more questions about the company performance and pay.

But as campaigners now become more aware of Harbour’s tactics, it means their results and their communication will come under more scrutiny in the future.