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North Sea Oil

Volume 78: debated on Monday 29 April 1985

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asked the Secretary of State for Energy what percentage of United Kingdom North sea oil is refined within the United Kingdom; how many jobs there are in United Kingdom refineries; and how this compares with the figure in May 1979.

In 1984, 37ยท5 per cent. of United Kingdom North sea oil was refined within the United Kingdom. There were some 23,100 jobs in the refining industry in September 1984, compared with about 25,300 in May 1979.

I know that the right hon. Gentleman is aware of the shattering blow caused to the communities affected by the BP-Llandarcy announcement, given the hundreds of jobs involved. Is he also aware that people, especially those who work in the refining industry, find it completely incomprehensible that we refine under 40 per cent. of United Kingdom North sea oil and that we have taken just as big a cut in refining capacity as other European countries which do not have a barrel of oil? Will he have urgent talks with the North sea oil companies to see whether they can improve on the amount of North sea oil that goes through our refineries, thereby possibly safeguarding at least some of the jobs in our refining industry?

I wholly appreciate how shattering that news was to the community around the refinery and to those who work there. As the hon. Gentleman knows, last week I met colleagues in the House with an interest in the matter as well as trade union representatives from the refinery. Their views are being made known to the BP management. I remind the hon. Gentleman that we have a considerable refining over-capacity in relation to our demand, and in many cases, because of the nature and quality of North sea crude, it is more economic to export it and to import lower quality crudes to give us the right mix in our refineries.

Will my right hon. Friend re-emphasise that the cut of the barrel must be aligned to the market and that there is adequate room for rationalisation in the United Kingdom and throughout western Europe?

In contrast with what the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) said, it is perhaps significant that the United Kingdom's reduction in refinery capacity, as a proportion of total capacity, is very much at the lower end compared with many other countries. What has happened in this country is, therefore, to some extent not quite as bad as in some other countries.

The right hon. Gentleman has indicated his awareness of the redundancies at Llandarcy and the fact that Llandarcy's products, in the main, are to be refined at Texaco's refinery at Pembroke. Is he aware that Llandarcy is the only refinery that is geared to deal with United Kingdom land oil? Will he intevene with his right hon. Friend and urge him to reconsider his decision, which was conveyed to me in a letter, and that representations be made to the BP board to change the decision, in the national interest?

I appreciate the hon. Gentleman's concern. He has, as he says, been in touch with my right hon. Friend about it. I assure him that the views of those who came to see me last week have been conveyed to British Petroleum.

May we thank the Minister for the sympathetic hearing that he gave us and our trade union colleagues when we met him last week? We gave him evidence of the allegations of a cartel operating within the refining industry in the United Kingdom, and also allegations of various back-to-back arrangements between the several oil companies. Will he look into those allegations and, if necessary, seek to lean upon BP to provide jobs, directly or indirectly, in replacement?

The important point to recognise is that it is a commercial decision of the company. The company is prepared to meet and to discuss the different aspects of it. It has made it clear that the decision was taken in the light of its commercial activities in the United Kingdom.

I have two large refineries in my constituency, Mobil and Shell, both of which have shed labour in the past few years. Does my right hon. Friend agree that those oil refineries must continue to be efficient in a very highly competitive international market?

I agree with my hon. Friend that it is a highly competitive market. In recent years the downstream refining activities of the oil companies, have been the least profitable parts of their activities. If we are to remain with a strong refining capacity, which I hope we shall, we must be competitive with overseas countries.

Does the Minister understand that, of the 1,000 job losses at Ellesmere Port, 350 fall on employees living in my constituency?

In the light of the Llandarcy redundancies, I remind the Minister that male unemployment is more than one in five in west Glamorgan. Does he know that Wales has lost 103,000 manufacturing jobs since 1979?

Yes, I am aware of those figures. They were among the points put to me by some of those who came to the meeting last week. As the hon. Gentleman knows, the Welsh Office was also represented at that meeting, and I know that my right hon. Friend the Secretary of State for Wales is fully aware of the position. I have spoken to him since that meeting.