Petroleum Act 1987

Schedule 5 to the 1984 Regulations U.K.

3 (1) The model clauses set out in Schedule 5 to the Petroleum (Production) (Landward Areas) Regulations 1984 (clauses for incorporation in development licences for landward areas) shall have effect with the following amendments (which relate to calculation and payments of royalty, royalty in kind, arbitration and measurement etc. of petroleum).

(2) In clause 1, after paragraph (2) there shall be inserted—

“(3) Any clause of this licence which refers to any provision of Part I of the Oil Taxation Act 1975 shall, unless the contrary intention appears, be construed as referring to that provision as it has effect for the time being for the purposes of petroleum revenue tax.”

(3) In clause 8(1), for “paragraphs (2) to (4)” there shall be substituted “ paragraph (1A) ”.

(4) In clause 8, for paragraphs (2) to (4) there shall be substituted—

“(1A) Paragraph (1) of this clause shall not apply to a chargeable period in which the Licensee delivers petroleum to the Minister in pursuance of clause 10 of this licence; but if the petroleum delivered has a value of less than the relevant percentage of the aggregate of—

(a) the value of the petroleum delivered (ignoring any such excess as is mentioned in paragraph (6D) of this clause), and

(b) the value of the petroleum relating to that period,

he shall pay to the Minister a royalty of an amount equal to the difference.”

(5) In clause 8(5), for “clause 9” there shall be substituted “ clauses 8A and 9 ”.

(6) In clause 8, after paragraph (6) there shall be inserted—

“(6A) Subject to paragraphs (6B) and (6C) of this clause, the value of petroleum delivered to the Minister in pursuance of clause 10 of this licence shall be ascertained for the purposes of this clause and clause 8A on such basis (or, where petroleum of more than one kind is delivered, such bases) as the Minister and the Licensee agree.

(6B) If the Minister and the Licensee fail to agree on the value of any petroleum delivered to the Minister in pursuance of clause 10 of this licence, it shall be ascertained on such basis as the Minister may specify as fair in a notice in writing given by him to the Licensee.

(6C) The Licensee may, during the period of 28 days beginning with the day on which he receives a notice from the Minister under paragraph (6B) of this clause, refer to arbitration in the manner provided by clause 37 of this licence any question as to whether the basis of valuation specified in the notice is fair.

(6D) In this clause and clauses 8A and 9, references to petroleum delivered to the Minister in pursuance of clause 10 include references to any excess over the quantity required to be delivered by a notice served in pursuance of paragraph (1) of that clause.”

(7) In clause 8(7), for the definition of “royalty petroleum” there shall be substituted—

““relevant percentage”, in relation to a chargeable period, means the effective rate at which, apart from any notice under clause 11 of this licence, royalty would be payable for that period in pursuance of paragraph (1) of this clause;”.

(8) After clause 8, there shall be inserted—

“8A (1) If in any chargeable period the Licensee delivers to the Minister in pursuance of clause 10 of this licence petroleum having a value greater than the relevant percentage of the aggregate of—

(a) the value of the petroleum delivered (ignoring any such excess as is mentioned in clause 8(6D) of this licence), and

(b) the value of the petroleum relating to that period,

the Minister shall pay to the Licensee a sum equal to the difference.

(2) In this clause, “chargeable period” and “relevant percentage” have the same meanings as in clause 8 of this licence.”

(9) In clause 9(2), for “fraction” there shall be substituted “ percentage ”.

(10) In clause 9(3), for “8(3) or (4)” there shall be substituted “ 8(1A) ”.

(11) In clause 9(7), after “may” there shall be inserted “ , during the period of 28 days beginning with the day on which the Licensee receives the notice, ”.

(12) In clause 9(8)(b), for “or (5)” there shall be substituted “ , (5) or (6) ”.

(13) In clause 9, after paragraph (8) there shall be inserted—

“(8A) If a payment is made by the Minister in pursuance of clause 8A of this licence more than two months after the end of the chargeable period to which the payment relates, an amount in respect of interest on the payment from the end of those two months shall also be payable by him to the Licensee.

(8B) Interest under paragraph (8A) of this clause shall be calculated in such manner as the Minister may specify from time to time in a notice in writing given by him to the Licensee (but sub-paragraph (a) of paragraph (8) of this clause shall apply to such a notice as it applies to a notice under paragraph (8)).”

(14) In clause 9(9)—

(a) for “ “royalty petroleum”” there shall be substituted “relevant percentage” ; and

(b) the definition of “the relevant fraction” and the word “and” preceding it shall be omitted.

(15) In clause 11, after paragraph (1) there shall be inserted—

“(1A) If and to the extent that the Minister so directs, the duty imposed by paragraph (1) of this clause shall be discharged separately in relation to petroleum won and saved—

(a) from each part of the licensed area which is an oil field for the purposes of the Oil Taxation Act 1975,

(b) from each part of the licensed area which forms part of such an oil field extending beyond the licensed area, and

(c) from each well producing petroleum from a part of the licensed area which is not within such an oil field.

(1B) If and to the extent that the Minister so directs, the preceding provisions of this clause shall apply as if the duty to measure or weigh petroleum included a duty to ascertain its quality or composition or both; and where a direction under this paragraph is in force, the following provisions of this clause shall have effect as if references to measuring or weighing included references to ascertaining quality or composition.”