Breaking Down the New Oil and Gas Authority Levy and Fees Regulations 2025

The UK government is rolling out new regulations aimed at reshaping how the Oil and Gas Authority (OGA) funds its operations. Here's a simplified look at what the new rules mean and why they matter.

What's Happening?

Starting April 2025, all companies holding offshore petroleum licenses will face a new levy designed to cover the costs of the OGA's operations for a year. The OGA, also known as the North Sea Transition Authority, is responsible for overseeing the oil and gas industry in the UK.

Why the Levy?

The Energy Act 2016 allows the government to recover the OGA's expenses from those benefiting from its services. While some costs are already covered by fees for specific services, the bulk will now be funded through this levy.

Who Pays and How Much?

The levy applies to all offshore petroleum license holders across the UK and adjacent waters. It includes different rates:

• A production levy for those with active production licenses.
• A non-production levy for those not actively producing.
• Discounted rates for small-scale operators, or "micro-enterprises."

The OGA will assess each company's status based on their revenue and staff size to determine the appropriate levy rate.

New Fees Introduced

In addition to the levy, the regulations introduce new fees related to changes in the control of licensees, both for petroleum and carbon storage licenses. This ensures that the OGA can monitor and approve any potential changes in company control, safeguarding the sector's governance and financial stability.

Why These Changes?

The changes are part of a broader effort to ensure the OGA can sustainably fund its operations without relying on general taxation. The new fees, introduced following consultations, reflect the actual costs of processing applications and ensure that those who benefit from the OGA's services bear the costs.

Impact on Businesses

The new regulations primarily affect businesses holding offshore licenses. While they introduce additional financial responsibilities, the fees and levies have been structured to avoid placing undue burden on smaller enterprises.

Monitoring and Future Changes

The levy will be reassessed annually to ensure it continues to meet the OGA's funding needs without overburdening businesses. Regular reviews of the fee structures will also ensure they remain fair and reflective of operational costs.

In summary, the new regulations mark a significant shift in how the UK's oil and gas sector is managed financially, aiming for a more self-sustaining model that aligns costs with those who benefit directly from the industry's regulatory oversight.