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HMRC internal manual

Oil Taxation Manual

Capital Gains: Licences for exploration and exploitation - Offshore licences

There are three types of Offshore Production Licence:

  • The main type is the ‘Traditional’ Seaward Production Licence which covers the full life of the field from exploration to decommissioning. The ‘Promote’ Seaward Production Licence is designed to allow small and start-up companies to obtain a Production Licence first and attract the necessary operating and financial capacity later.
  • The ‘Frontier’ Seaward Production Licence has a 6 year exploration phase and is designed to allow companies to screen large areas for a period so that they can look for a wider range of prospects.

In addition to the above Production licences, DECC also issue Exploration Licences which are non-exclusive and permit the holder to conduct non-intrusive surveys, such as seismic or gravity and magnetic data acquisition, over any part of the UK Continental Shelf that is not held under a Production Licence. Wells may be drilled under these licences but must not exceed 350 meters in depth without the approval of the Secretary of State.