OT01009 - The NSTA Role in the UK North Sea: decommissioning oil installations

The NSTA is also responsible for the development and implementation of Government policy on decommissioning offshore oil and gas installations and pipelines.

The Petroleum Act 1998 enables the NSTA to place an obligation to decommissioning on the co-venturers of every offshore installation and the owners of every offshore pipeline on UKCS. The companies served with a notice become jointly and severally liable to submit a decommissioning programme for Ministerial approval and to ensure that the provisions of the programme are implemented. Any decommissioning programme needs to be compatible with the international rules for the protection of the environment during decommissioning, the OSPAR agreement. This applies to all oil assets except, broadly speaking, those assets where the weight or nature of the footings renders conventional removal impossible.

The availability and nature of tax relief for the costs of decommissioning an asset for PRT and CT capital allowances also depends on whether the decommissioning falls within an NSTA approved programme. The NSTA can provide copies of approved decommissioning programmes to LB Oil and Gas.

There is detailed guidance on decommissioning on the NSTA website which you can find at https://www.nstauthority.co.uk/decommissioning/. The tax impacts are considered at OT10000 (PRT) and OT28000 (RFCT Capital Allowances).