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HMRC internal manual

Oil Taxation Manual

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HM Revenue & Customs
Updated
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PRT: oil allowance - oil won and saved

The phrase ‘oil won and saved’ occurs in several places in OTA75\S8, in particular in the definition of the B and C factors, see OT17150.

‘Oil won and saved’ is understood to mean

  • the oil produced and disposed of or appropriated in the period (but excluding royalties and tariffs in kind, see for example OT05350)
  • plus the closing stock and less the opening stock. (In practice, oil in transit is excluded from stock in line with its exclusion from assessable profits under OTA75\SCH3\PARA7).

Where one metric tonne of oil is deemed to be delivered under the capacity charge provisions of FA84\S114(4) or FA84\S114(6) the amount should be added to the oil won and saved in the C Factor.

Oil won and saved also includes all inert components of the hydrocarbon stream disposed of or relevantly appropriated, e.g. carbon dioxide, sulphur, nitrogen, etc. included in grid specification methane. No reduction of the C factor to take account of them is permissible.

Commingled Streams

Where field production is commingled with production from other fields (see OT05600), the quantity of blend oil allocated to the field, and the participators’ share of that quantity are used to determine the B and C factors in the oil allowance formula. Thus the same basis is used for the gross profit and for oil allowance.