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Gas Production

Volume 455: debated on Tuesday 23 January 2007

3. What discussions he has had with ministerial colleagues on the benefits to Scotland of encouraging gas production west of Shetland. (116342)

I have regular discussions with ministerial colleagues on a range of issues. As my right hon. Friend the Secretary of State for Trade and Industry confirmed to the hon. Gentleman last week, the lack of gas infrastructure west of Shetland is a key constraint on present development. We have established a group from industry and Government to work together on that. In addition, we have changed the licensing scheme to encourage development. About 60 blocks have been licensed, and activity is under way.

I thank the Secretary of State for that answer. The whole country benefits from developments in the North sea, and the Scotland Office should be well placed to impress upon the Government just how much high-tech industry and how many manufacturing jobs are developed on the back of such activity, and exactly what the export potential is. It is crucial to find new provinces and to open up new fields before we decommission the old ones. In his answer to me last week, the Secretary of State for Trade and Industry spoke a lot about the problems of getting the oil out, but the crucial factor in the west of Shetland basin is the need to get the gas fields together. It is the cost of bringing together the small gas fields that is inhibiting production.

I am certainly happy to reiterate the hon. Gentleman’s points to my right hon. Friend the Secretary of State for Trade and Industry. The hon. Gentleman is right to acknowledge the significant potential west of Shetland. It represents about 17 per cent. of the UK’s remaining oil and gas reserves, and presents a considerable challenge, on which the Government are working with industry.

While such exploration is important, does my right hon. Friend agree that an economy built solely on the success or failure of fossil fuels is likely to result in an overall reduction in spending and economic activity?

My hon. Friend is right to say that oil in the North sea and elsewhere is a finite commodity. North sea production passed its peak in the first year of the Scottish Parliament back in 1999.

I hear the claim that Norway should be a lodestar for us in using that finite commodity more effectively. Norway has about twice the UK’s oil reserves, yet Norwegians pay a higher top rate of tax, a higher basic rate of income tax, higher VAT, higher employers’ national insurance contributions and higher duties. That is something that the whole House should consider.