Introduction Background Note
25.Blended oil is the result of the commingling (or mixing or blending) of oil from two or more oil fields (for the purposes of the Petroleum Revenue Tax (PRT) legislation “oil” can refer to hydrocarbons such as crude oil or gas). For example, the Brent blend is made up of a number of oil fields that are commingled before travelling down the Brent pipeline to shore.
26.In such cases it is important to establish for tax purposes the contribution each of the originating fields makes to the blend once it reaches the shore and is then sold. The commingling rules formalise for tax purposes the commercial arrangements in place for the allocation of oil to the various field owners.
27.The new rules do away with the need for companies routinely to provide details of changes made to an allocation methodology (which happens for example when a new oil field commences production). Instead HMRC will only ask for information where it appears that the allocation method is not made on a just and reasonable basis.