In sections 195A to F16195F, a reference to a UK licence that relates to a developed area is a reference to any UK licence apart from one that relates to an undeveloped area.

Subsections (4) and (5) of section 36 of the M1Finance Act 1983 (meaning of “development") shall have effect in relation to F22subsections (1) F9to (1B) above as they have effect in relation to subsection (2) of that section.

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In relation to a disposal to which section 194 applies of a licence under which the buyer acquires an interest in the licence only so far as it relates to part of the licensed area, any reference in subsection (1) or subsection (3) of that section or subsection (1) above to the licensed area shall be construed as a reference only to that part of the licensed area to which the buyer’s acquisition relates.

In sections 194 F8to F6195F and this section—

• F4“appropriate authority”, in relation to a UK licence means—

  1. a

     in the case of a licence under Part 1 of the Petroleum Act 1998—

     1. ai

        F11the Scottish Ministers, in relation to the Scottish onshore area, as defined in section 8A of that Act;

     2. i

        the Welsh Ministers, in relation to the Welsh onshore area (as defined in section 8A of that Act);

     3. ii

        otherwise, the Oil and Gas Authority;

  2. b

     in the case of a licence under the Petroleum (Production) Act (Northern Ireland) 1964, the Department for the Economy;

• “foreign oil concession” means any right to search for or win overseas petroleum, being a right conferred or exercisable (whether or not by virtue of a licence) in relation to a particular area;

• “interest” in relation to a licence, includes, where there is an agreement which—

  1. a

     relates to oil from the whole or any part of the licensed area, and

  2. b

     was made before the extraction of the oil to which it relates,

  any entitlement under that agreement to, or to a share of, either that oil or the proceeds of its sale;

• “licence” means any UK licence or foreign oil concession;

• F14“licence-consideration swap” has the meaning given in section 195A(2);

• “licensed area” (subject to subsection (4) above)—

  1. a

     in relation to a UK licence, has the same meaning as in Part I of the M2Oil Taxation Act 1975; and

  2. b

     in relation to a foreign oil concession, means the area to which the concession applies;

• “licensee”—

  1. a

     in relation to a UK licence, has the same meaning as in Part I of the Oil Taxation Act 1975; and

  2. b

     in relation to a foreign oil concession, means the person with the concession or any person having an interest in it;

• F15“mixed consideration” means consideration that consists partly of disposal of a UK licence;

• F15“mixed-consideration swap” has the meaning given in section 195A(2);

• F15“no gain/no loss amount”, in relation to a company that disposes of a UK licence, means the amount that would be taken to be the consideration for the disposal if section 56(2) applied to the disposal;

• F15“non-licence consideration” means consideration that does not consist of disposal of a UK licence, F12... ;

• “oil”—

  1. a

     except in relation to a UK licence, means any petroleum (within the meaning of F20Part I of the Petroleum Act 1998); and

  2. b

     in relation to such a licence, has the same meaning as in Part I of the Oil Taxation Act 1975;

• “overseas petroleum” means any oil that exists in its natural condition at a place to which neither F20Part I of the Petroleum Act 1998 nor the M3Petroleum (Production) Act (Northern Ireland) 1964 applies; and

• F15“swap arrangements”, in relation to a licence-consideration swap or a mixed-consideration swap, means the arrangements under which the swap takes place;

• “UK licence” means a licence within the meaning of Part I of the M4Oil Taxation Act 1975.

References in sections 194 and 195 to a part disposal of a licence shall include references to the disposal of any interest in a licence.

Subsections (5C) to (5F) apply for the purposes of sections 195A to 195F.

Subsections (5E) and (5F) apply if, under the swap arrangements, economic benefits and liabilities under the licences concerned are treated as passing at a time (“the effective time”) which falls before or after the day on which the arrangements are entered into.

But if the swap arrangements make provision for an increase in the non-licence consideration to reflect the period between the effective time and the time it is payable, the non-licence consideration is to be treated as if it were the amount found by making a corresponding increase in the amount determined under subsection (5E).