Where a participator in a U.K. oil field disposes of oil, liquefied petroleum gases (LPGs) and condensate otherwise than by way of a sale at arm's length the disposal is taxed as if it took place at a statutorily defined market value.
A separate market value is produced for each taxable crude blend that is the subject of non arm's length disposals. Under the new pricing rules that will operate from 1 July 2006 (subject to approval of the Finance Bill by the House of Commons), there are two types of crude for valuation purposes.
Those crude oils that are valued using Price Reporting Agency data. At 1 July 2006 these crudes are Brent, Ekofisk, Flotta, Forties and Statfjord.
All other blends (including LPG's and Condensates) are classed as category 2. Category 2 oils will be valued with reference to deal data supplied to LBS Oil & Gas (formerly OTO) in PRT returns. The methodologies will aim to resemble the way each particular blend is sold at arms length and will be agreed with Industry.
Any enquiries or comments on values should be directed by email to Andrew Parrock (Telephone 020 7438 6841).
