Licensee criteria

We believe we can maximise economic recovery by having a diverse mix of companies involved in the UKCS – from super majors to mid-cap businesses to small, niche players.

As production licences confer exclusive rights, all the appropriate technical and financial capacity to contribute to the delivery of MER UK is an important criterion for the acceptability of a company to be a licensee. In addition, there are other requirements of licensees such as the establishment of a tax base, finance, residence and organisational structure and for offshore licensees there are requirements under the Offshore Safety Directive.

Financial viability and financial capacity

Licensees must meet certain financial criteria to demonstrate that they have the financial capacity to exploit the exclusive rights granted by the licence. This is a separate criterion from that applied by the Offshore Safety Directive. The following documents set out our financial criteria and the required forms of words for parent company guarantees.

Related document

Tax considerations

The OGA routinely copies new licensee cases to HM Revenue & Customs (HMRC) for information. The vast majority of transactions take a form that is familiar to both the OGA and HMRC, and are not expected to raise any new tax issues; so tax is not generally a factor in the OGA’s decisions. However, the OGA does discuss tax issues with HMRC and may take them into account in any particular decision.

HMRC is aware of certain types of commercial arrangement that present an inherent tax risk. These include having a partnership on a licence and some cases of the assignment of a beneficial interest in a licence to somebody other than the licensee. The OGA will exercise a presumption against approving any such arrangements, though any case would be considered on its merits, and the OGA is prepared to discuss proposals to address potential tax issues.

Residence criteria

Prospective licensees must satisfy the OGA that they have a place of business in the UK. This means at least one of the following:

  • Having a staffed presence in the UK
  • Being registered at Companies House as a UK company
  • Having a UK branch of a foreign company registered at Companies House

To join a licence and take an interest in a producing field must either:

  • To be registered at Companies House as a UK company; or
  • To carry on your business through a fixed place of business in the UK.

A ‘fixed place of business’ normally means a staffed presence. For further information see section 148 of the Finance Act 2003 or article 5 of the OECD Guidelines for Multinational Enterprises for more information.

Contact us

Nic Rogers 
Oil & Gas Licensing Administration 
Oil and Gas Authority
4th Floor
21 Bloomsbury Street 
London WC1B 3HF 

T: 0300 067 1627
Email: Nic Rogers