The UK's largest independent oil and gas business, Harbour Energy, will shun the latest North Sea licensing round in the UK due to the windfall tax.
Earlier this year, the government launched its first oil and gas exploration round since 2019 to boost domestic supply of oil and gas.
But Harbour is reviewing its spending plans in light of the levy, and will not participate in the round.
Energy Voice says Harbour has been one of the staunchest opponents of the tax, which Chancellor Jeremy Hunt increased by 10% last month, to give an overall tax rate of 75% for offshore oil and gas producers.
A Harbour spokesperson said: "As a result of the extension of the energy profits levy announced in the government's autumn statement, we are reviewing investment levels and company-wide capital allocation.
"This review is ongoing and, in the meantime, we have decided not to submit bids as part of this licensing process.
Focus
"We have good opportunities within our existing North Sea and International portfolios, and these will be our focus at this time."
Mike Tholen, sustainability director at industry body Offshore Energies UK, said the chancellor needs to act swiftly.
He told Energy Voice: "This is just what we predicted would happen as a result of the windfall tax. This was a tax conceived to deal with a short-term surge in profits, which is now having a very long-term impact on the UK energy industry.
"If companies like these decide not to invest their money in the UK's North Sea now, then the inevitable result will be a decline in production in a few years' time.
"That will be bad for the industry, bad for consumers, because they will be exposed to a greater risk of energy shortages and, in the long run, it will be bad for the Exchequer too, because if we produce less UK oil and gas, we will be paying less taxes.
"There is still time to save this situation, and we are very keen to work constructively with the government to turn it around before more investors pull out, but we would call on Jeremy Hunt to act fast and decisively."
- It has been claimed that plans to accelerate the rollout of offshore wind in the UK could be knocked off course by renewed oil and gas activity.
The Institute for Energy Economics and Financial Analysis believes efforts to increase North Sea oil and gas output "risks jeopardising" the nation's energy transition.
The think tank is warning about the impact of competition for limited supply-chain resources.
Energy Voice reports that the result will be an increase in costs, which could disproportionately hamper the offshore wind sector.
FTSE 100
The UK's top share index, the FTSE 100, was static at 7,426 points shortly after opening this morning, following yesterday's 69-point loss.
Brent crude futures dipped 0.38% to $80.90 a barrel.
Companies reporting today
- Full-year results: JPMorgan Indian Investment Trust