OT30500 - Capital gains: unitisations: introduction

Unitisations may arise where a field straddles two or more blocks held by different licence groups under separate production licences, or straddling the median line between the UK and another state’s sector of the Continental Shelf.

Where the field is solely within the UK Sector, the Secretary of State may direct that it should be developed as one unit in order to maximise recovery and avoid duplication of facilities or competitive drilling. If the licence groups do not produce a satisfactory development programme between them, he has powers to impose a fair and equitable scheme. For further background information see OT30501.

For transmedian fields, treaty arrangements exist whereby the Governments of the UK and the relevant state, in consultation with the licence groups, seek to agree how to develop the field and share the production there from. A number of treaties have been signed between UK and Norway which inter-alia confirm the taxing rights of each state.