United Kingdom Upstream Fiscal and Regulatory Report - Further Improvements Sought Despite Recent Tax Cuts


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United Kingdom Upstream Fiscal and Regulatory Report - Further Improvements Sought Despite Recent Tax Cuts

Summary

United Kingdom Upstream Fiscal and Regulatory Report - Further Improvements Sought Despite Recent Tax Cuts, presents the essential information relating to the terms which govern investment into United Kingdoms upstream oil and gas sector. The report sets out in detail the contractual framework under which firms must operate in the industry, clearly defining factors affecting profitability and quantifying the states take from hydrocarbon production. Considering political, economic and industry specific variables, the report also analyses future trends for United Kingdoms upstream oil and gas investment climate.

Scope

- Overview of current fiscal terms governing upstream oil and gas operations in United Kingdom
- Assessment of the current fiscal regimes state take and attractiveness to investors
- Charts illustrating the regime structure, and legal and institutional frameworks
- Detail on legal framework and governing bodies administering the industry
- Levels of upfront payments and taxation applicable to oil and gas production
- Information on application of fiscal and regulatory terms to specific licenses
- Outlook on future of fiscal and regulatory terms in United Kingdom

Reasons to buy

- Understand the complex regulations and contractual requirements applicable to United Kingdoms upstream oil and gas sector
- Evaluate factors determining profit levels in the industry
- Identify potential regulatory issues facing investors in the countrys upstream sector
- Utilize considered insight on future trends to inform decision-making
1 Table of Contents
1 Table of Contents 1
1.1 List of Tables 4
1.2 List of Figures 4
2 Regime Overview 5
3 State Take Assessment 8
4 Key Fiscal Terms 10
4.1 Upfront Payments 10
4.1.1 Rentals 10
4.1.2 Royalties (Abolished January 1, 2003) 12
4.1.3 Royalties - Onshore Northern Ireland 12
4.2 Petroleum Revenue Tax 12
4.2.1 Application of Petroleum Revenue Tax 12
4.2.2 Supplement 12
4.2.3 Oil Allowance 13
4.2.4 Tariff Receipts Allowance 13
4.2.5 Cross-Field Allowance 13
4.2.6 Safeguard 14
4.2.7 Provisional Expenditure Allowance (Abolished from July 1, 2009) 14
4.3 Corporation Tax 14
4.3.1 Ring Fence Corporation Tax 14
4.3.2 General Corporation Tax 15
4.3.3 Deductions and Depreciation 15
4.3.4 Mineral Extraction Allowance 16
4.3.5 Ring Fence Expenditure Supplement 16
4.4 Supplementary Charge 16
4.4.1 Application of Supplementary Charge 16
4.4.2 Investment Allowance 17
4.4.3 Cluster Allowance 17
4.4.4 Onshore Allowance 17
4.4.5 Previous Field Allowances 18
4.4.6 Ultra-High Pressure/High Temperature Field: 18
4.4.7 Ultra Heavy Oil Field: 18
4.4.8 Small Oil or Gas Field: 18
4.4.9 Deepwater Gas Field: 19
4.4.10 Large Deepwater Oil Field: 19
4.4.11 Large Shallow-Water Gas Field: 19
4.4.12 Additionally Developed Oil Field (Brownfield Allowance): 19
4.5 EU Emissions Trading Scheme 20
4.6 Customs Duties 20
4.7 Value Added Tax 20
5 Regulation and Licensing 21
5.1 Legal Framework 21
5.1.1 Governing Law 21
5.1.2 Contract Type 21
5.1.3 Title to Hydrocarbons 22
5.2 Institutional Framework 22
5.2.1 Licensing Authority 23
5.2.2 Regulatory Agency 23
5.3 Licensing Process 23
5.3.1 Licensing Rounds 23
5.3.2 Out-of-Round Applications 23
5.3.3 Applicant Requirements 23
5.3.4 Work Program Proposals 24
5.3.5 Application Fee 24
5.3.6 Application Assessment 24
5.4 License Terms 25
5.4.1 Duration 25
5.4.2 Relinquishments 25
5.5 Restrictions on Hydraulic Fracturing 26
6 Outlook 27
7 Contact Information 30

1.1 List of Tables
Table 1: Summary 5
Table 2: United Kingdom, Innovate Seaward License Rentals (/km2), 2016 10
Table 3: United Kingdom, License Rentals (/km2), Pre-2016 Licenses 11
Table 4: United Kingdom, Ring Fence Corporation Tax Rates (%), 1975-2016 14
Table 5: United Kingdom, Ring Fence Corporation Tax Rates (%), 1975-2016 15
Table 6: United Kingdom, Current Licenses, License Duration (years) 25
Table 7: United Kingdom, Previous Licenses, License Duration (years) 25
Table 8: United Kingdom, Relinquishment Requirements, Pre-2016 Licenses 26

1.2 List of Figures
Figure 1: Regime Flow Chart - UK and UKCS (excluding onshore Northern Ireland) 6
Figure 2: Regime Flow Chart - Onshore Northern Ireland 7
Figure 3: United Kingdom, Effect of 2016 Budget on Indicative State Take, 2016 8
Figure 4: United Kingdom, Indicative NPV10/boe, IRR, and State Take Comparison - Regional Peers, 2016 9
Figure 5: United Kingdom, Legal Framework 21
Figure 6: United Kingdom, Institutional Framework 22