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Offshore Oil Industry (Government Participation)

Volume 887: debated on Monday 24 February 1975

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asked the Secretary of State for Energy if he will make a statement on the negotiations being conducted about Government participation in the oil industry operating on the United Kingdom continental shelf.

I refer the hon. Member to the answer given by my right hon. Friend the Chancellor of the Duchy of Lancaster to the hon. Member for Bolsover (Mr. Skinner) on 19th February—[Vol. 886, c. 1338].

Will the right hon. Gentleman say whether the negotiations are being conducted on a different basis for the large operators in the North Sea as distinct from the smaller companies? Will he confirm or deny that it is the Government's policy to squeeze the smaller companies out of the North Sea into the hands of the proposed British National Oil Corporation? That is a step which may please Labour Members, but it will drastically delay the day when Britain can achieve self-sufficiency in oil.

No, it is not the objective to squeeze anybody out of the North Sea. We recognise that there will be continuing and profitable rôles for those who have taken risks in the most hazardous waters in the world. At the same time, there is a Government political commitment that must be met, namely, the intention behind the negotiations to achieve participation.

Is my right hon. Friend aware that there is a tremendous campaign being waged by the oil companies to get, as a result of what could be almost termed a capital strike, the greatest possible amount of profit that can be obtained? Does he agree that it is his job, as the representative of the Labour movement, and in line with the Labour manifesto, in concert with the Chancellor of the Duchy of Lancaster, to ensure that we get the maximum amount of money out of the North Sea, even if that means a slight delay in terms of the poker match or bluffing match presently being engaged in by the oil barons in this country and outside?

I can assure my hon. Friend that the manifesto commitment will be maintained. Further, we have taken steps to fulfil that commitment. I am sure that my hon. Friend will be reassured when the Petroleum Bill is published, I hope, next month.


asked the Secretary of State for Energy what is his estimate of the cost of acquiring majority participation in the North Sea oil industry; and what is the estimated cost of providing 51 per cent. of the development capital.

These costs will depend upon the outcome of the negotiations with the oil companies.

If the Chancellor of the Duchy of Lancaster claims to have reassured the American oil companies that nationalisation is to be a voluntary book-keeping exercise to appease the left wing of the Labour Party, how did the right hon. Gentleman reassure the American oil companies that he was speaking on behalf of the Government?

Of course my right hon. Friend was speaking on behalf of the Government. As he made absolutely plain, the major take will come from the tax, but we need a British stake in the oil and an entitlement to it. That is the objective of the participation negotiations.

Is my hon. Friend aware of the view being conveyed by some oil company executives that a significant reduction in the price of Middle East oil would make the British medium-and small-size fields economically unviable? What is his opinion on that view?

It would depend how far oil prices came down. I hope that oil prices do come down in traditional oil supplying countries, but I do not see a great deal of evidence that that is likely to happen within the near future. That is one of the imponderables. All the statistics available to the Government show that North Sea oil is still a profitable undertaking.