Oil Taxation Act 1975 section 10

Modification of Part I in connection with certain gas sold to British Gas Corporation

Section 10 deals with how petroleum revenue tax (PRT) calculations are modified when gas from an oil field was sold to the British Gas Corporation under contracts made before the end of June 1975, ensuring that such gas is largely excluded from the normal PRT computation.

• Gas sold to British Gas Corporation under pre-July 1975 contracts is excluded from the PRT gross profit or loss calculation, and if the remaining non-excluded oil is 5% or less of the excluded gas, it too is disregarded.
• Excluded oil is treated as though it were not oil for the purposes of various expenditure allowance and valuation provisions, and any royalty repayments relating to excluded oil are also ignored.
• Where a taxable field contains excluded gas, allowable expenditure on exploration, development, and related costs is reduced proportionately based on the ratio of non-excluded reserves to total reserves, with specific apportionment rules for abandonment guarantee costs and asset-related expenditure.
• Participators are not required to report the price received for excluded gas in their PRT returns, and for conversion purposes, 1,100 cubic metres of gas (at standard temperature and pressure) is treated as equivalent to one metric tonne of non-gas oil.

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