OT30010 - Capital Gains: Licences for exploration and exploitation - Brief History

The Petroleum Act 1998, consolidated a number of provisions previously contained in five separate pieces of primary legislation (including the Petroleum (Production) Act 1934) & vests ownership of oil and gas within Great Britain and its territorial sea (broadly 12 miles from the shore line) in the Crown.

The Petroleum Act gives the Government rights to grant licences to explore for and exploit these resources and those on the UK Continental Shelf. The licences are divided into two categories, onshore and offshore.

The Continental Shelf Act 1964 extends the provisions to include oil in place in the sea bed and subsoil of the UK Continental Shelf. These were “designated areas” over which the Crown exercises jurisdiction under the general authority of the 1958 United Nations Geneva Convention, which permits the exercise of such rights over the UK Continental Shelf as are necessary for the exploitation of the area and oil and gas.

The designated area of the UK Continental Shelf has been refined over the years by a series of designations under the Continental Shelf Act following the conclusion of boundary agreements with neighbouring states. The Petroleum Act 1998 does not relate to overseas licences granted under different regimes.

Further information on licences can be obtained from the North Sea Transition Authority website.