As of the 1st October 2016, the Oil and Gas Authority (“OGA”) will be established as an independent regulator by the UK Government. It will be classed as an independent government company with a new set of powers.

Such transition should allow the OGA to act with greater speed and flexibility whilst, at the same time, promoting the Maximising Economic Recovery (“MER”) UK Strategy.

The powers to be transferred to the OGA from DECC include:

  • licensing and regulatory powers which include awarding licenses, consent to assignments, modification/exclusion of Model Clauses and charging fees for services provided to the industry.
  • decommissioning powers in that the OGA must be consulted before submission of an abandonment plan to the Secretary of State, as well as having the role on advising on alternatives to decommissioning.
  • certain powers relating to determination of oil fields and cluster areas in relation to the assessment of tax liability.

The OGA will have additional powers including access to operators’ meetings, data acquisition and retention and dispute resolution. The OGA shall also have the authority to impose a range of sanctions including enforcement notices, financial penalties, revocation of licences and removal of operator.

Although the Department for Business Energy and Industrial Strategy will remain in charge of policy, it will not have any involvement in the OGA’s operations.

It is hoped that these additional powers will enable the OGA to drive collaboration and promote the remaining prospectivity of the UK Continental Shelf, resulting in significant future investment. While these changes may take some time to become established and the impact to be felt in the industry, it can be agreed that this is at the very least a positive move in the right direction.