This provides instructions on the purpose, scope, intent and application of the DRD. Comments on key aspects of the DRD are provided, with cross-references to the relevant clauses. A copy of the DRD and information on the application for a DRD are available on the UK government`s website at www.gov.uk/government/consultations/decommissioning-relief-deeds-increasing-tax-certainty-for-oil-and-gas-investment-in-the-uk-continental-shelf. The estimate of the cost of high fallowing (UDCE) is calculated by doubling the estimated decommissioning costs (the “net amount” associated with the TTH asset) after they have made necessary adjustments in accordance with paragraph 9 of paragraph 15 to fa19. Structuring an operation to maintain decommissioning responsibility is not just a matter of tax relief. When the buyer takes possession of the assets and fulfills the dismantling obligations, but the seller pays for all or a substantial portion of the costs, governance also becomes a central concern when the buzzing amounts are essential. What participation does the seller need in the decisions of the buyer and, if so, of his co-investors with respect to the decommissioning? If part of the economic justification for the transaction is the potential for the buyer to decommission for less than the seller, improper monitoring or interference from the seller may affect that result. On the other hand, few organizations are pleased that another spends tens or hundreds of millions of dollars without adequate participation. Sellers will also be concerned that the way assets are exploited can effectively increase decommissioning commitments and reputational exposure in the event of a problem during decommissioning operations. When drawing the corresponding line, the seller will also have in mind his goal of freeing up the organizational capabilities that were previously devoted to relevant assets, which can be affected if a significant current participation is required. Finally, careful consideration and definition are required if a fence is put around the facilities for which the seller retains responsibility for the dismantling. While in many cases it is clear what a new facility is, what about modifications or replacements of existing facilities? If there are multiple ASDs, the lowest estimate of decommissioning costs should be used in one of these ASDs, established within 12 months of the transfer. Dismantling – Types of dismantling contracts If a field does not have an ASD or if no estimate of the dismantling costs has been made in the 12 months prior to the transfer, transition parties may agree to take one at the time of transfer so that they can use that figure as a net amount.
If they do not agree on an ASD or an estimate of the dismantling costs in the 12 months prior to the transfer, the net cost amount is zero.