This page mainly applies to England and Wales. Scotland and Northern Ireland may have different rules — check the jurisdiction before relying on this information.
Last amended by Energy Act 2016 in 2016. Created the Oil and Gas Authority (now NSTA) as an independent regulator to maximise economic recovery of UK petroleum.
Independent editorial summary — not the official statute text. Read the official version on legislation.gov.uk.
Summary
The Petroleum Act 1998 consolidated legislation on oil and gas exploration and production in the UK Continental Shelf. It vests ownership of petroleum in the Crown and establishes the licensing regime administered by the North Sea Transition Authority (formerly Oil and Gas Authority). It also provides for decommissioning obligations.
Key Points
- Vests all petroleum in strata in the Crown (s.2)
- Secretary of State may grant exploration and production licences (s.3)
- Model clauses incorporated into licences (schedule terms)
- Establishes decommissioning obligations on licensees and owners (Part IV)
- Section 29 notices require decommissioning programmes
- Joint and several liability for decommissioning costs
Parts & Sections
Amendments History
2016 — Energy Act 2016
Created the Oil and Gas Authority (now NSTA) as an independent regulator to maximise economic recovery of UK petroleum.
Frequently asked questions
- Who owns the oil and gas found under the sea?
- Under the Petroleum Act 1998, all petroleum found in strata within the UK Continental Shelf is owned by the Crown. This means that no individual or company has inherent ownership rights to oil or gas reserves. Instead, the Crown holds the exclusive right to search for and extract these resources, subject to the licensing regime established by the Act.
- Can anyone drill for oil or gas without a licence?
- Individuals or companies cannot search for or extract petroleum without permission. The Act states that no person may search, bore for, or get petroleum except under a valid licence. These licences are granted by the Secretary of State and are necessary to legally access and exploit petroleum resources in designated areas.
- Which body manages the licensing for oil and gas exploration?
- The North Sea Transition Authority, formerly known as the Oil and Gas Authority, administers the licensing regime for oil and gas exploration and production. It acts as an independent regulator established to maximise the economic recovery of UK petroleum. The authority manages the process through which the Secretary of State grants exploration and production licences to operators.
- What are the decommissioning obligations for oil and gas companies?
- Companies holding licences are legally required to decommission their oil and gas installations. The Act establishes specific obligations for licensees and owners to manage the end-of-life process. This includes submitting decommissioning programmes in response to Section 29 notices. Furthermore, these parties can be held jointly and severally liable for the costs associated with decommissioning activities.
- Are companies jointly liable for the cost of decommissioning?
- Yes, the Act provides for joint and several liability regarding decommissioning costs. This means that if multiple parties are involved in an installation, they can all be held responsible for the full cost of decommissioning. This legal mechanism ensures that the financial burden of removing infrastructure is not left unresolved if one party becomes insolvent or unable to pay their share.