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’, whereby the Authority recovers its costs from the companies benefitting from its services.
The OGA will revise the levy, with effect from 1 April 2020, increasing it from £26,420,000 in 2019/20 to £29,648,000 in 2020/21. This is to support delivery of the UK net zero target and a new digital energy platform. Offshore licensees will be notified of the exact levy due for their licences in mid-April, after the amount due is calculated.
There is a two-tier levy mechanism with the 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. This apportionment is regularly reviewed to ensure it remains appropriate.
For the purposes of the levy we consider ‘producing’ licences to be those licences to which the OGA has given consent to start production, i.e. 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 ‘non-producing’ levy rate. Additionally, the OGA is allowing a ninety or eighty per cent discount on some ‘Promote’ licences and ‘Innovate’ licences in Phase A or B of their initial term, if held by companies which qualify as micro-businesses.
The OGA levy does not currently apply to the onshore sector.
Over 99% of the levy of £22.8 million for the financial year 2018-19 was collected. An underspend of the levy received in 2017-18, totalling £828,000, is being paid back to the industry.
The OGA remains very focused on delivering a high-quality service and providing value for money to the industry. We are committed to setting the levy in a fair and transparent manner and our intention is to reduce the running costs of the OGA over time.
The OGA Levy rates for the 2019-20 financial year are as follows:
|Licence Category||2019/20 Levy|
|Microbusiness & Promote/Innovate Phase A Licensee (Non-Producing)||£ 1,128.18|
|Microbusiness & Innovate Phase B Licensee (Non-Producing)||£ 2,256.37|
|Other Non-Producing and Innovate Phase C Licensee||£ 11,281.83|
|Exploration Licence||£ 11,281.83|