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Oil/Gas Industry

Volume 454: debated on Tuesday 12 December 2006

When my right hon. Friend met representatives of the oil and gas industry, did he discuss with them their tax liability over the next 30 years? It is unlikely that he did, as neither he nor I nor the oil industry knows what the oil price is likely to be next week, never mind over the next 30 years, but I am told that there are some people who think that one can run a country on the basis of the oil income.

I find myself in agreement with my hon. Friend. I met the chairman of Shell in the UK last week and made it clear how inherently difficult it is to try to predict the oil price looking to the future. One need only look at the significant drop in the price of Brent crude in recent months to evidence the fact that it would be the height of irresponsibility to try to build an economic policy on as volatile a commodity as oil.

I draw the attention of the House to my entries in the Register of Members’ Interests related to the oil and gas industry. The price of oil into the future is obviously unknown, but what can be less unknown is Government policy. The Government can give a clear indication of the framework in which investors will operate—both the tax and regulatory regime. What message has the right hon. Gentleman given to the industry about his Government’s desire for a long-term strategy to ensure maximum recovery of oil and gas from the North sea?

The meeting that I had with Shell was the latest meeting that I have had with representatives of the oil interests in the United Kingdom. Of course we want to see a long-term productive future for the UK continental shelf, and for the North sea basin in particular. That is why, through the PILOT mechanism, my hon. Friend the Under-Secretary and I have been working week in, week out, month in, month out to ensure that there is a sustained engagement with our Department, the Department of Trade and Industry and the Treasury. On that basis, I believe we can look forward with real optimism to the years ahead for the North sea.

With reference to the fluctuating oil price, has my right hon. Friend had time to look at the GERS figures that were published yesterday, and what conclusion does he draw from them?

The figures confirm, as The Scotsman made clear on its front page today, that there is a black hole in the Scottish National party’s economics. Oil has a significant contribution to make, but it cannot fill the black hole created by the public expenditure commitments that the nationalists would be determined to make.