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operatorship of a licence? The government does not have the right
to participate and be carried in a licence.
If royalties are paid, what are the royalty rates? Are they
fixed? Do they differ between onshore and offshore production?
Aside from tax, are there any other payments due to the
government? Are there any tax stabilisation measures in place!
Royalties are no longer payable under a licence. Licences
do carry a small annual charge, known as a „rental‟, which is due
on each anniversary of the date of the licence. There are no tax
stabilisation measures in place, demonstrated in March 2011 when
the budget raised tax on oil and gas output from 20 per cent to 32
per cent overnight.

What is the customary duration of oil leases, concessions
or licences!
Offshore licences
There are three types of offshore licence (traditional,
frontier and promote), and each licence comprises three terms. A
licence will expire automatically at the end of each term, unless
certain conditions allowing the licensee to advance to the next
term have been fulfilled.
Traditional licence
The duration of a traditional licence is split into
successive terms of four, four and 18 years. To progress from the
initial to the second term, the licensee must have completed a work
programme as approved by DECC and relinquished a minimum of
50 per cent of the acreage under the licence. If, during the second
term, DECC has approved the development plan and all of the
acreage outside that development has been relinquished, the
licence may continue into the third term. DECC may exercise its
discretion to extend the third term beyond the prescribed 18-year
period if production is ongoing
Frontier licences

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