In October 2015, following consultation with the industry, an industry levy was introduced to fund the OGA, in line with the established principle across regulation and service delivery of ‘user pays’, where the Authority recovers its costs from the companies benefiting from its services.
During the first six months of the financial year 2015–16 the OGA was funded mainly by BEIS (formerly DECC), with a smaller amount (£1.1 million) of funding raised from fees and charges. Funding from BEIS was provided for administration, programme and capital expenditure.
This is a two-tier levy mechanism with an annual levy apportioned between pre-production (11%) and in-production (89%) licence holders, based on an assessment of the costs that the OGA occurs in relation to each group. The apportionment, which will apply again in 2016–17, will be monitored and where necessary updated as part of an annual consultation process.
For the purposes of the levy we consider producing licences to be those licences, which the OGA has consented to start production, ie, where the licence has an approved Field Development Plan. Exploration licence holders and licence holders with no approved Field Development Plan are subject to a lower levy rate.
The levy of £10.034 million for the six months of 2015-16 was collected in full. There are no outstanding amounts owing. The OGA’s expenditure against the levy collected was £8.256 million, resulting in £1.778 million refundable to industry.
We remain very focused on high-quality delivery and providing value for money to the industry. Our intention is to reduce the cost of the OGA over time.