OT21407 | Field allowance: previously decommissioned fields

[Field Allowance was superseded by Investment Allowance which was introduced by Fiance Act 2015 and applies to expenditure incurred on or after 1 April 2015. See OT21550 for guidance on Investment Allowance.]

The policy of the field allowance is to provide an incentive for development of economic but commercially marginal oil and gas fields. There is no policy reason to deny a field allowance to the redevelopment of a field that has previously been decommissioned. FA2011\S63 provides this with retrospective effect for accounting periods ending on or after 22 April 2009, and applies amended existing PRT legislation to determine whether a field has been decommissioned.

Accordingly, if all assets of an oil field which are relevant assets have been decommissioned, any authorisation of development in respect of that field which predates the decommissioning is ignored when determining whether an oil field is a new oil field.

An asset is a relevant asset of an oil field if it has ever been a qualifying asset in relation to any participator in the field, and has ever been used for the purpose of winning oil from the field.

The PRT legislation at para7 sch1 OTA 1975 applies to determine whether the qualifying assets of a relevant area are decommissioned, and is now applied to determine whether the relevant assets of an oil field are decommissioned.