asked the Secretary of State for Energy if he will estimate the effect of the fall in oil prices and the changes in the tax regime on the level of exploration for oil and gas in the North Sea.
I do not expect these factors to have a significant effect on the level of offshore exploration.
Surely the Secretary of State must bear in mind that, with spot prices down to $28 a barrel, and with the announcement that the Government expect the same yield from the North Sea, this will deter anyone looking for commercial profit from going ahead with the exploration programme that was envisaged by the Government?
It is true that these are uncertain times in the oil market and that this is making all oil companies review their investment plans and assumptions throughout the world. That is inevitable. However, the level of exploration in the North Sea is higher than it has been for many years and there is no sign of any slackening, despite the tax changes that were announced a little over a year ago.
If it is the case that there is a pullback in investment in the North Sea—and the oil companies say when they meet hon. Members that this is the fault of the tax regime—has the Secretary of State discussed this with them to disprove the point that they are making?
I see representatives of the oil companies both in concert and singly on many occasions, as the right hon. Gentleman will imagine. There is no doubt that the oil companies would like to see a lighter tax regime. My right hon. and learned Friend the Chancellor of the Exchequer examined the matter carefully and reviewed it in the light of all the evidence, including investment plans, and came out with a new tax system that, with regard to structure, went a long way towards meeting the points made by the oil companies. With regard to the level of taxation, there was only a slight amelioration, but there was some. My right hon. and learned Friend is satisfied that that is a tax system that is fair both to the oil companies and to the general body of taxpayers.
Is not the rate of oil exploration a long-term matter? Therefore, is it not correct that it is as much the general state of the economic situation across the Western world as the immediate tax regime that affects the oil companies' business plans for the future? To that end, is it not a fact that when my right hon. Friend successfully launches Britoil in the current financial year it will show the Western oil companies that we believe in a successful and forceful policy in the North Sea''
I entirely agree with my hon. Friend. He may have read the article in the Sunday Telegraph yesterday, which pointed out the considerable attractions of Britoil for the investor.