• On 24 October 2012 the Department for Energy and Climate Change (DECC) published a consultation seeking views on its proposal to start recovering costs associated with certain regulatory services it provides to the oil and gas industry.
  • DECC already charges for the costs of some offshore environmental regulatory services. The new charges proposed would be additional to these existing charges and would apply from 6 April 2013.
  • Interested parties should consider responding to the consultation by 5 December 2012.

Proposed charges and methodology

The proposed charges (see Table 1 below) will cover staff and overhead costs as well as incidental costs, for example IT costs related to maintaining DECC's Energy Portal for online consent applications.

DECC's charging proposals differentiate between simple consents, such as for drilling, production and licence assignment, for which a standard fee will be payable, and more complex applications, such as consideration of a field development plan, pipeline works or a CO2 storage plan. For this latter category DECC suggests that a pre-determined/regulated daily rate should be charged for each of the officers (including technical experts) engaged.  

Click here to view table.

Invoices will be made out directly to the company making the application, even where the company makes an application on behalf of multiple companies on the licence. Industry is already accustomed to dealing with specific instances where an applicant may not necessarily be the party that will benefit from the consent to be granted, for example, a licence administrator appointed under a split block licence will make sure it will be able to pass costs back as usual.

Next steps

The deadline for DECC's consultation is 5 December 2012 and the new charging regime is intended to come into effect from 6 April 2013.

Useful links

Please click on the following links to access relevant documents:

DECC's consultation

Impact assessment

DECC's consultation page

Background notes:

  • Under section 188(1) of the Energy Act 2004 (Energy Act), there is an express power to make charges in relation to the Secretary of State's "relevant energy functions" including "services or facilities provided or made available by him in the carrying out of his relevant energy functions". This section further allows charges to be made "for purposes which are incidental to, or otherwise connected with, the carrying out of any of those functions".
  • Through its Offshore Environmental and Decommissioning Unit, DECC already charges for certain services provided in the environmental regulation of the offshore oil and gas industry.