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Statutory Instruments
Environmental Protection
Petroleum
Made
2nd March 2020
Laid before Parliament
4th March 2020
Coming into force
1st April 2020
The Secretary of State, in exercise of the powers conferred by sections 12(1), (2), (5) and (6) and 13(1) to (4) and 14(1) and (3) to (9) of the Energy Act 2016 M1, section 67(2) and (3)(b) of the Marine and Coastal Access Act 2009 M2, section 82OA(2) of the Energy Act 2008 M3, section 302(1) of the Merchant Shipping Act 1995 M4 and section 56(1) and (2) of the Finance Act 1973 M5, makes the following Regulations.
The Secretary of State has consulted the Oil and Gas Authority in accordance with sections 12(8) and 13(8) of the Energy Act 2016.
The Secretary of State has obtained the consent of the Treasury in accordance with section 302(1) of the Merchant Shipping Act 1995 and section 56(1) of the Finance Act 1973.
Marginal Citations
M22009 c.23. The Secretary of State makes these Regulations as the appropriate licensing authority under section 113(2)(a), (4)(a), (6)(a) and (8) of the Marine and Coastal Access Act 2009.
M51973 c.51. Section 56 is amended by S.I. 2011/1043.
1. These Regulations may be cited as the Oil and Gas Authority (Levy and Fees) and Pollution Prevention and Control (Fees) (Miscellaneous Amendments) Regulations 2020 and come into force on 1st April 2020.
Commencement Information
I1Reg. 1 in force at 1.4.2020, see reg. 1
2. In this Part—
“leviable costs” means the sum of the costs incurred by the OGA M6 and the Lord Chancellor in exercising the functions referred to in section 13(2)(a) of the Energy Act 2016, excluding any costs incurred in the exercise of functions referred to in section 13(2)(b) of that Act, in respect of the relevant charging period;
“licensee” means a person who holds a petroleum licence or, where a petroleum licence is held by more than one person, together the persons who hold that petroleum licence;
“non-production levy” means the levy which is payable in respect of the relevant charging period in accordance with regulation 4 and which is calculated in accordance with the formula at regulation 5(2);
“offshore exploration licence” means a petroleum licence of the sort referred to in regulation 2(2)(a) of the Offshore Exploration (Petroleum, and Gas Storage and Unloading) (Model Clauses) Regulations 2009 M7, relating to an area any part of which lies within offshore waters;
“offshore production licence” means a petroleum licence relating to an area any part of which lies within offshore waters which is not an offshore exploration licence;
“offshore waters” means—
the waters comprising the territorial sea of the United Kingdom, and
the sea in any area for the time being designated under section 1(7) of the Continental Shelf Act 1964 M8;
“payment notice” means a notice given to a licensee in accordance with regulation 6 in respect of the relevant charging period;
“production levy” means the levy which is payable in respect of the relevant charging period in accordance with regulation 3 and which is calculated in accordance with the formula at regulation 5(1);
“petroleum licence” means a licence granted under—
which is not an excluded licence M11 in relation to the relevant charging period;
“relevant charging period” means the period beginning on 1st April 2020 and ending on 31st March 2021;
“relevant time” means 12.01a.m. on 1st April 2020; and
“total amount of levy” means the total amount of levy payable by licensees in accordance with regulations 3 and 4, being £29,648,000.
Commencement Information
I2Reg. 2 in force at 1.4.2020, see reg. 1
Marginal Citations
M6“OGA” is defined in section 1(4) of the Energy Act 2016 as the Oil and Gas Authority.
M7S.I. 2009/2814; this instrument is amended by S.I. 2016/912 and S.I. 2016/992.
M81964 c.29; section 1(7) is amended by the Oil and Gas (Enterprise) Act 1982 (c.23) section 37, schedule 3, paragraph 1 and by the Energy Act 2011 (c.29) section 103.
M91934 c.36; this Act is repealed by the Petroleum Act 1998 (c.17), section 51 and Schedule 5, subject to the savings provisions set out in Schedule 3.
M101998 c.17; section 3 is amended by the Scotland Act 2016 (c.11) section 48(1) to (4) and by S.I. 2016/898.
M11“Excluded licence” is defined by section 13(10) of the Energy Act 2016.
3.—(1) A licensee is liable to pay the production levy in respect of each offshore production licence which is held by the licensee at the relevant time and in respect of which the criterion at paragraph (2) is satisfied.
(2) The criterion is that at the relevant time the licensee is, in accordance with that licence, entitled to—
(a)erect or carry out any relevant works (within the meaning of the licence) either in the licensed area or elsewhere, for the purpose of getting petroleum from that area or for the purpose of conveying to a place on land petroleum got from that area, or
(b)get petroleum from that area otherwise than in the course of searching for petroleum, drilling wells or testing wells.
(3) Where the licensee is more than one person, the liability under paragraph (1) is joint and several.
Commencement Information
I3Reg. 3 in force at 1.4.2020, see reg. 1
4.—(1) Subject to any discount to be applied in accordance with paragraphs (2) and (3), a licensee is liable to pay the non-production levy in respect of each of the following kinds of licence held by the licensee at the relevant time—
(a)an offshore exploration licence;
(b)an offshore production licence in respect of which the criterion at regulation 3(2) is not satisfied.
(2) A licensee which at the relevant time—
(a)is a micro-enterprise; and
(b)holds an innovate licence in phase B of its initial term,
is liable to pay the non-production levy discounted by 80 per cent in respect of that licence
(3) A licensee which at the relevant time—
(a)is a micro-enterprise; and
(b)holds either—
(i)a promote licence in its promote period; or
(ii)an innovate licence in phase A of its initial term,
is liable to pay the non-production levy discounted by 90 per cent in respect of that licence.
(4) Where the licensee is more than one person—
(a)the liability under this regulation is joint and several; and
(b)the licensee is only a micro-enterprise for the purposes of paragraphs (2) and (3) if every person who is the licensee is a micro-enterprise.
(5) In this regulation—
“innovate licence” means an offshore production licence in which, in accordance with the model clauses, the initial term of the licence (within the meaning of the licence) is divided into phases;
“micro-enterprise” has the meaning given in article 2(3) of the Annex to Commission Recommendation 2003/361/EC of 6th May 2003 concerning the definition of micro, small and medium-sized enterprises M12;
“model clauses” means model clauses prescribed by the Petroleum Licensing (Production) (Seawards Areas) Regulations 2008 M13;
“promote licence” means an offshore production licence in which, in accordance with the terms of the licence—
a “promote period” is specified, and
a clause is included concerning the effect of the expiry of the promote period in relation to the continuation of that licence beyond that period.
Commencement Information
I4Reg. 4 in force at 1.4.2020, see reg. 1
Marginal Citations
M12OJL 124, 20.5.2003, p36.
M13S.I. 2008/225. This instrument is amended by S.I. 2009/3283, S.I. 2016/912, S.I. 2017/426 and S.I. 2017/855.
5.—(1) The OGA must calculate the production levy in accordance with the formula—
(2) The OGA must calculate the non-production levy in accordance with the formula—
(3) In this regulation—
“C” is £29,648,000; (being the total amount of levy);
“N100” is the total number of licences in respect of which a licensee is liable to pay the non-production levy under regulation 4(1) and in respect of which neither the criterion at regulation 4(2) nor the criterion at regulation 4(3) is satisfied;
“N90” is the total number of licences in respect of which a licensee is liable to pay the non-production levy discounted by 90 per cent under regulation 4(3);
“N80” is the total number of licences in respect of which a licensee is liable to pay the non-production levy discounted by 80 per cent under regulation 4(2); and
“P” is the total number of offshore production licences in respect of which a licensee is liable to pay the production levy under regulation 3(1).
Commencement Information
I5Reg. 5 in force at 1.4.2020, see reg. 1
6. Where a licensee is liable to pay a levy to the OGA in accordance with these Regulations, the OGA must notify the licensee in writing by 31st May 2020 as to—
(a)whether the licensee is liable to pay the production levy, the non-production levy or both;
(b)the total amount of levy payable by the licensee;
(c)the date by which that amount is to be paid, being a date not less than 30 days after the date of the notification; and
(d)details of how the payment can be made.
Commencement Information
I6Reg. 6 in force at 1.4.2020, see reg. 1
7.—(1) Where any amount of levy is not paid in accordance with a payment notice, the licensee is liable to pay to the OGA interest calculated in accordance with paragraph (2) on the amount of the levy which remains unpaid.
(2) Interest payable under paragraph (1) is simple interest calculated from day to day on the unpaid amount from the date by which the amount is required until the date when payment is made, at a rate of five per cent over the Bank of England base rate from time to time.
(3) Where the licensee is more than one person the liability under this regulation is joint and several.
(4) For the purpose of this regulation, the “Bank of England base rate” means—
(a)the rate announced from time to time by the Monetary Policy Committee of the Bank of England as the official dealing rate, being the rate at which the Bank is willing to enter into transactions for providing short term liquidity in the money markets, or
(b)where an order under section 19 of the Bank of England Act 1998 M14 (reserve powers) is in force, any equivalent rate determined by the Treasury under that section.
8. Where any amount of levy is not paid in accordance with a payment notice, that unpaid amount, together with any interest due in accordance with regulation 7, is recoverable as a civil debt due to the OGA.
Commencement Information
I8Reg. 8 in force at 1.4.2020, see reg. 1
9.—(1) This regulation applies where the total amount of levy exceeds the leviable costs.
(2) The OGA must, by 31st December 2021, return to each licensee the difference between—
(a)the amount paid by or on behalf of that licensee in accordance with the relevant payment notice (including any interest paid by or on behalf of that licensee in accordance with regulation 7); and
(b)the recalculated amount of levy payable by that licensee.
(3) Any payment notice in respect of which sums remain outstanding shall be construed as referring to the recalculated amount of levy payable by the relevant licensee (and regulation 7 shall be construed accordingly).
(4) In this regulation—
“recalculated amount of levy payable” means the sum of—
the amount of levy payable by a licensee in accordance with a payment notice; and
any amount of interest which became payable by that licensee in accordance with regulation 7,
multiplied by the relevant multiplier; and
“relevant multiplier” means the figure calculated by dividing the leviable costs by the total amount of levy, expressed to three decimal places.
Commencement Information
I9Reg. 9 in force at 1.4.2020, see reg. 1
10.—(1) The Oil and Gas Authority (Fees) Regulations 2016 M15 are amended as follows.
(2) In regulation 4 (fees payable for consents and pipeline works authorisations) in the formula in paragraph (3), for “£595” substitute “ £715 ”.
(3) In regulation 6 (fixed fees payable for other consents) for the table (fees for other consents) following paragraph (3), substitute the following—
“Activity or matter requiring consent | Fee Payable |
---|---|
Methodology proposed for the measurement of petroleum | £1,445 |
Drill a primary well | £610 |
Drill a sidetrack well branching off from the principal well to a target location different from that of the principal well | £590 |
Fit or refit equipment in a well for the purpose of enabling hydrocarbon production or injection | £320 |
Get petroleum from a licensed area | £990 |
Variation of a consent to get petroleum from a licensed area | £990 |
Flare or vent petroleum from a well | £725 |
Variation of a consent to flare or vent petroleum from a well | £725 |
Well suspension | £590 |
Put back into use any well subject to a well suspension | £320 |
Abandon a well permanently | £1,025 |
Change of licensee of a petroleum licence | £610 |
Change of the beneficiary of rights granted by a petroleum licence | £610 |
Appointment of an operator under a petroleum licence | £1,825 |
Extension of the initial, second or final term of a petroleum licence | £4,640 |
Extension of the final phase of the initial term of a petroleum licence | £4,640 |
Amendment of a work programme | £4,640” |
(4) In regulation 6A(1) (fees payable for consent to retention or development area proposals), for “£1,068” substitute “ £1,340 ”.
(5) In regulation 6B(1) (fees payable for determination of oil fields), for “£1,124” substitute “ £5,820 ”.
(6) In regulation 6C for the table (fees payable for metering examinations and tests) following paragraph (3), substitute the following—
“Type of metering examination or test | Fee payable |
---|---|
Metering examination under a seaward area production licence | £3,240 |
Metering examination under a petroleum exploration and development licence | £3,260 |
Meter flow calibration | £2,020” |
(7) In regulation 7 for the table (fees payable for applications for petroleum licences) following paragraph (2), substitute the following—
“Type of licence | Fee payable |
---|---|
Landward petroleum exploration licence | £1,480 |
Seaward petroleum exploration licence | £1,480 |
Methane drainage licence | £120 |
Petroleum exploration and development licence | £3,955 |
Seaward area production licence | £5,930” |
(8) In regulation 8(1) (fees payable for applications for gas storage licences), for “£2,100” substitute “ £5,930 ”.
(9) In regulation 9(1) (fees payable for applications for carbon dioxide appraisal and storage licences), for “£2,100” substitute “ £5,930 ”.
Commencement Information
I10Reg. 10 in force at 1.4.2020, see reg. 1
Marginal Citations
M15S.I. 2016/904 This instrument is amended by S.I. 2017/426. S.I. 2018/56 and S.I. 2018/980.
F111. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F1Reg. 11 omitted (31.12.2020 immediately before 11 p.m.) by virtue of The Offshore Oil and Gas Exploration, Production, Unloading and Storage (Environmental Impact Assessment) Regulations 2020 (S.I. 2020/1497), regs. 1(1), 2(4)(f) (with reg. 1(2)-(6), 20)
12. In the Offshore Petroleum Activities (Conservation of Habitats) Regulations 2001 M16, in regulation 20A(2)—
(a)for “£183” substitute “ £190 ”;
(b)for “£98” substitute “ £101 ”.
Commencement Information
I11Reg. 12 in force at 1.4.2020, see reg. 1
Marginal Citations
M16S.I. 2001/1754. Regulation 20A is inserted by S.I. 2015/1431 and amended by S.I. 2016/529, S.I. 2016/1042 and S.I. 2019/439.
13. In the Offshore Petroleum Licensing (Offshore Safety Directive) Regulations 2015 M17, in regulation 13A(2)—
(a)for “£183” substitute “ £190 ”;
(b)for “£98” substitute “ £101 ”.
Commencement Information
I12Reg. 13 in force at 1.4.2020, see reg. 1
Marginal Citations
M17S.I. 2015/385. Regulation 13A is inserted by S.I. 2017/404 and amended by S.I. 2019/439.
14. In the Pollution Prevention and Control (Fees) (Miscellaneous Amendments and Other Provisions) Regulations 2015 M18, in regulation 7(1)—
(a)for “£183” substitute “ £190 ”;
(b)for “£98” substitute “ £101 ”.
Commencement Information
I13Reg. 14 in force at 1.4.2020, see reg. 1
Marginal Citations
M18S.I. 2015/1431. This instrument is amended by S.I. 2016/529, S.I. 2016/1042, S.I. 2017/404, S.I. 2018/311 and S.I. 2019/439.
Kwasi Kwarteng
Minister of State for Business, Energy and Clean Growth
Department for Business, Energy and Industrial Strategy
Iain Stewart
Rebecca Harris
Two of the Lords Commissioners of Her Majesty's Treasury
(This note is not part of the Regulations)
These Regulations make provision for calculating and imposing a levy on the holders of petroleum licences in respect of the period beginning on 1st April 2020 and ending on 31st March 2021 (“the relevant charging period”). The levy is payable to meet costs incurred by the Oil and Gas Authority (“the OGA”) in carrying out its functions as well as costs incurred by the Lord Chancellor in connection with the provision of Tribunals to consider appeals against the decision of the OGA.
These Regulations also make provision to increase certain fees charged in relation to activities carried out by the Secretary of State and OGA relating to the offshore oil and gas industry.
Regulation 3 sets out liability to pay the production levy for the relevant charging period. This is the highest rate of levy.
Regulation 4 sets out liability to pay the non-production levy. Paragraphs (2) and (3) provide that micro-enterprises holding promote or innovate licences at the relevant time in certain circumstances qualify to pay the non-production levy at discounted rates in respect of those licences.
Regulation 5 provides the methodology for calculating the production levy and the non-production levy.
Regulations 6 to 8 provide for the process by which licensees are notified as to the amount of levy payable, for interest to be payable on late payments and for the OGA to be able to take action to recover any unpaid levy as a civil debt.
Regulation 9 requires the amount of the levy to be paid by licensees under regulation 3 or 4 to be adjusted if the total amount of levy to be recovered under these Regulations exceeds the leviable costs incurred by the OGA and Lord Chancellor in respect of the relevant charging period.
Regulation 10 sets out revised rates for fees under the Oil and Gas Authority (Fees) Regulations 2016.
Regulations 11 to 14 increase the hourly rates used to calculate fees charged under:
the Offshore Petroleum Production and Pipe-lines (Assessment of Environmental Effects) Regulations 1999 (S.I. 1999/360);
the Offshore Petroleum Activities (Conservation of Habitats) Regulations 2001 (S.I. 2001/1754);
the Offshore Petroleum Licensing (Offshore Safety Directive) Regulations 2015 (S.I. 2015/385);
the Pollution Prevention and Control (Fees) (Miscellaneous Amendments and Other Provisions) Regulations 2015 (S.I. 2015/1431), which makes provision for charging fees:
relating to certain activities under the Merchant Shipping (Oil Pollution Preparedness, Response and Co-operation Convention) Regulations 1998 (S.I. 1998/1056), the Offshore Installations (Offshore Safety Directive) (Safety Case etc.) Regulations 2015 (S.I. 2015/398) and the Fluorinated Greenhouse Gases Regulations 2015 (S.I. 2015/310);
relating to certain licences under regulation 55 of the Conservation of Offshore Marine Habitats and Species Regulations 2017 (S.I. 2017/1013);
in connection with consents to locate under section 82A of the Energy Act 2008 (c.32), and emergency safety notices under sections 82F and 82G(8) of the Energy Act 2008;
in respect of monitoring compliance with the requirements of the Energy Savings Opportunity Scheme Regulations 2014 (S.I. 2014/1643); and
for applications for certain licences under section 71 and for stop notices and emergency safety notices under sections 102-105 of the Marine and Coastal Access Act 2009 (c.23).
The fees referred to in regulations 11 to 14 are calculated by first determining the number of hours work carried out by specialist and non-specialist officers and then multiplying those numbers by the relevant hourly rate. In each case these Regulations increase the hourly rate for specialist officers from £183 to £190 and for non-specialist officers from £98 to £101.
A full impact assessment has not been produced for this instrument as no or no significant impact on the private, voluntary or public sectors is foreseen. An impact assessment was produced for the original levy regulations, the Oil and Gas Authority (Levy) Regulations 2015 and is available from the Department for Business, Energy and Industrial Strategy at 1 Victoria Street, London SW1H 0ET and on www.legislation.gov.uk.