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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 Kingdom's 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 state's take from hydrocarbon production. Considering political, economic and industry specific variables, the report also analyses future trends for United Kingdom's 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 regime's 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 KingdomReasons to buy- Understand the complex regulations and contractual requirements applicable to United Kingdom's upstream oil and gas sector- Evaluate factors determining profit levels in the industry- Identify potential regulatory issues facing investors in the country's upstream sector- Utilize considered insight on future trends to inform decision-making
1 Table of Contents1 Table of Contents 11.1 List of Tables 41.2 List of Figures 42 Regime Overview 53 State Take Assessment 84 Key Fiscal Terms 104.1 Upfront Payments 104.1.1 Rentals 104.1.2 Royalties (Abolished January 1, 2003) 124.1.3 Royalties - Onshore Northern Ireland 124.2 Petroleum Revenue Tax 124.2.1 Application of Petroleum Revenue Tax 124.2.2 Supplement 124.2.3 Oil Allowance 134.2.4 Tariff Receipts Allowance 134.2.5 Cross-Field Allowance 134.2.6 Safeguard 144.2.7 Provisional Expenditure Allowance (Abolished from July 1, 2009) 144.3 Corporation Tax 144.3.1 Ring Fence Corporation Tax 144.3.2 General Corporation Tax 154.3.3 Deductions and Depreciation 154.3.4 Mineral Extraction Allowance 164.3.5 Ring Fence Expenditure Supplement 164.4 Supplementary Charge 164.4.1 Application of Supplementary Charge 164.4.2 Investment Allowance 174.4.3 Cluster Allowance 174.4.4 Onshore Allowance 174.4.5 Previous Field Allowances 184.4.6 Ultra-High Pressure/High Temperature Field: 184.4.7 Ultra Heavy Oil Field: 184.4.8 Small Oil or Gas Field: 184.4.9 Deepwater Gas Field: 194.4.10 Large Deepwater Oil Field: 194.4.11 Large Shallow-Water Gas Field: 194.4.12 Additionally Developed Oil Field (Brownfield Allowance): 194.5 EU Emissions Trading Scheme 204.6 Customs Duties 204.7 Value Added Tax 205 Regulation and Licensing 215.1 Legal Framework 215.1.1 Governing Law 215.1.2 Contract Type 215.1.3 Title to Hydrocarbons 225.2 Institutional Framework 225.2.1 Licensing Authority 235.2.2 Regulatory Agency 235.3 Licensing Process 235.3.1 Licensing Rounds 235.3.2 Out-of-Round Applications 235.3.3 Applicant Requirements 235.3.4 Work Program Proposals 245.3.5 Application Fee 245.3.6 Application Assessment 245.4 License Terms 255.4.1 Duration 255.4.2 Relinquishments 255.5 Restrictions on Hydraulic Fracturing 266 Outlook 277 Contact Information 301.1 List of TablesTable 1: Summary 5Table 2: United Kingdom, “Innovate” Seaward License Rentals (£/km2), 2016 10Table 3: United Kingdom, License Rentals (£/km2), Pre-2016 Licenses 11Table 4: United Kingdom, Ring Fence Corporation Tax Rates (%), 1975-2016 14Table 5: United Kingdom, Ring Fence Corporation Tax Rates (%), 1975-2016 15Table 6: United Kingdom, Current Licenses, License Duration (years) 25Table 7: United Kingdom, Previous Licenses, License Duration (years) 25Table 8: United Kingdom, Relinquishment Requirements, Pre-2016 Licenses 261.2 List of FiguresFigure 1: Regime Flow Chart - UK and UKCS (excluding onshore Northern Ireland) 6Figure 2: Regime Flow Chart - Onshore Northern Ireland 7Figure 3: United Kingdom, Effect of 2016 Budget on Indicative State Take, 2016 8Figure 4: United Kingdom, Indicative NPV10/boe, IRR, and State Take Comparison - Regional Peers, 2016 9Figure 5: United Kingdom, Legal Framework 21Figure 6: United Kingdom, Institutional Framework 22