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HMRC internal manual

Oil Taxation Manual

PRT: terminal liftings - treatment of balancing parcels (Regulation 6)

Where a contract;

  • allows for the purchaser to nominate the volume to be lifted and
  • balancing parcels (as defined), where they arise, are allocated to a participator’s fields on a different basis than the volume of oil nominated by the purchaser,

then these rules apply to determine how any balancing parcels will be allocated.

Balancing Parcel Recipient field (Reg 6(1))

Where the above conditions are met any balancing parcels that arise in respect of a participator’s lifting in a blend shall always be allocated to the same one field in the blend.

Each participator is obliged to notify LB Oil & Gas of the field that will be its balancing parcel recipient field.

That field will be the recipient of every such balancing parcel (which can have a positive or negative volume) until that field ceases production or the participator’s interest is disposed of. At that point another balancing parcel recipient field can be chosen and will be the recipient of every balancing parcel thereafter (Reg 6(2).

The only departure from the above will be in circumstances where allocation of the balancing parcel to the nominated field is not possible or would breach facility rules (for instance if the allocation to that field was likely to breach the over- or underlifting limits allowed under the facility lifting agreement). In which case another field can be nominated as the recipient field, and will remain so for as long as these circumstances exist. Thereafter the original field will revert to being the recipient (Reg 6(3)).

A participator must notify LB Oil & Gas of the need to use a substitute balancing parcel recipient field before the first lifting to which such a need will apply (Reg 6(4)).