Who can refer the question of oil field abandonment to the Board under Schedule 8 paragraph 1?

The responsible person for an oil field may initiate a formal abandonment referral to the Board. This is a voluntary process — the responsible person triggers it when they believe the winning of oil from the field has permanently ceased, based on their assessment that the field is exhausted or no longer commercially viable.

How must the abandonment referral be made under Schedule 8 paragraph 1 of the Oil Taxation Act 1975?

The referral must be made by written notice given to the Board. An informal or verbal communication would not suffice. The responsible person prepares a formal written notice asking the Board to determine whether production from the oil field has permanently come to an end, thereby initiating the statutory abandonment process.

What happens if the Board agrees that oil production has permanently ceased?

If the Board determines that the winning of oil has permanently ceased, this triggers the abandonment provisions under the Oil Taxation Act 1975. This has significant implications for the treatment of remaining costs, outstanding expenditure, and available tax reliefs associated with the oil field for oil taxation purposes.

Can the Board impose abandonment on an oil field without a referral from the responsible person?

Under Schedule 8 paragraph 1, the referral is initiated by the responsible person — it is not something the Board imposes. The responsible person makes a judgement that production has permanently stopped and then seeks the Board's formal confirmation of that position through the prescribed written notice procedure.

Oil Taxation Act 1975 Schedule 8 paragraph 1

Reference and determination of question of abandonment of oil field

Schedule 8, paragraph 1 deals with the process by which the responsible person for an oil field can formally refer the question of whether oil production has permanently ceased to the Board for their decision.

The responsible person for an oil field may initiate a formal abandonment referral when they believe oil production has permanently stopped.
The referral must be made by written notice given to the Board.
The Board is then asked to decide whether the winning of oil from that field has indeed permanently ceased.
This is a voluntary referral process — the responsible person triggers it when circumstances suggest the field is exhausted or no longer viable.

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