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Depletion Policy

Volume 974: debated on Monday 26 November 1979

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asked the Secretary of State for Energy if he will make a statement on oil depletion policy.


asked the Secretary of State for Energy when he expects to make a statement on the Government's depletion policy.

We can expect to achieve net self-sufficiency in oil during the course of next year. Depletion policy is kept under continuing review in the light of production prospects thereafter and all other relevant factors. I hope we shall be able to make a statement to the House in due course.

I accept that the Varley assurances, given so recklessly by the previous Government, have allowed the oil companies an unnecessary bonanza in relation to oil production, but will the Minister agree that the formula he has just put forward to the House is meaningless as it stands, and that there is an urgent need for a depletion policy to be evolved to take care of the gap between supply and demand which will emerge in the early 1990s?

I accept what the hon. Gentleman said about the need for a depletion policy, but I remind him that any depletion policy announced by this Government must take into consideration the ever-changing position within the oil industry, both at home and abroad. It is, therefore, better that we should take some little time in ensuring that we evolve the proper depletion policy, rather than rushing into it.

I welcome the Government's intention to restrict the flaring off of North Sea gas which cannot be brought ashore, and believe that the flaring off of excess North Sea gas is wrong, but will the Minister inform the House in what circumstances, if any, he might allow such flaring off to take place in the future?

Each case will be considered individually and on its merits. Exceptions might be granted in cases where the amount of gas was so small that it would be totally uneconomic to gather it. That might be an instance in which flaring would be allowed.

Will the Minister accept that a vital element in discussing the depletion policy is the Government making up their minds on a gas-gathering system? When do they propose to do that?

The hon. Gentleman will be aware that the present study being carried out by the British Gas Corporation and Mobil is likely to be completed early in the new year. It is hoped that it will be available for consideration by about the end of March. Before that is received it would obviously be unwise to make any positive decisions.

Will the Minister of State modify the Varley proposals for depletion and also bear in mind a European requirement, provided that the Europeans are prepared to pay world prices?

We have undertaken to honour the Varley assurances for the period to which they apply. Any other consideration will be considered from time to time.