Decommissioning—decommissioning relief deed

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Produced in partnership with Isla Stewart of Matheson
Practice notes

Decommissioning—decommissioning relief deed

Copyright © 2025 LexisNexis

Produced in partnership with Isla Stewart of Matheson

Practice notes
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The Decommissioning Relief Deed (DRD) is a contract between the UK government and a 'Qualifying Company' which operates in the oil and gas exploration and production market in the UK or on the UK Continental Shelf (UKCS).

It aims to provide certainty on the tax relief a Qualifying Company will receive at the time of offshore oil and gas decommissioning and, in certain circumstances, may render a payment from the UK government to the Qualifying Company.

The DRD is in a prescribed format published by the UK government and cannot be amended.

For more information on decommissioning in the oil and gas sector, see Practice Notes:

  1. •

    Decommissioning—legislative background

  2. •

    Decommissioning—International Law and UK Government Policy

  3. •

    Decommissioning—planning for decommissioning

Oil and gas taxation—the need for a DRD

The oil and gas industry has had a tumultuous relationship with the government in respect of taxation. The industry pays traditional corporation tax on all profits but also pays additional corporation tax (ring fence corporation tax (RFCT) and supplementary charge (SC)) on profits derived from oil and gas exploration

Isla Stewart
Isla Stewart

Matheson

Isla is an Associate in the Oil & Gas team. She qualified in 2010 after spending her traineeship with a leading international law firm. Isla then spent three years with the offshore oil and gas industry's leading trade association, Oil & Gas UK, as their in-house lawyer where she gained a strong background in working on complex industry issues across the UKCS.

Isla advises both operator and service sector clients on a range of aspects including asset acquisitions and disposals, joint venture matters and service sector contracts.

She has also been involved in a number of industry initiatives, most prominently the revision of the LOGIC general terms and conditions, the competing interests of the renewables industry offshore and the development of post-tax security for decommissioning security agreements.

Isla has also spent time on secondment to upstream oil and gas companies Talisman-Sinopec and Maersk Oil.

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Jurisdiction(s):
United Kingdom
Related legal acts:

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