Skip to main content

Oil Exploration: Licence Applications

Volume 375: debated on Wednesday 20 October 1976

The text on this page has been created from Hansard archive content, it may contain typographical errors.

2.52 p.m.

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government how many of the 53 applications for offshore exploration licences under the fifth round were received by 15th September, and how many of those received by 5th October are from groups depending mainly on foreign finance; and when the allocations will be made public.

My Lords, no applications were received by 15th September. It is customary in the industry for companies to withhold their applications until just before the deadline. The response has been encouraging and shows that the United Kingdom Continental Shelf continues to be an attractive oil province. The applications are now the subject of commercially confidential discussions, and I am therefore not able to comment on the applicants or their financial resources. A further statement about the round will be made when the applications have been examined and decisions taken on the award of licences.

My Lords, in thanking the noble Lord for that Answer, may I also, through him, thank the Secretary of State for a letter which he was good enough to write to me on the matter when my Question went down? Would not the noble Lord agree that the round threatened to be a complete flop until BNOC made it known that, in exercising its 51 per cent. share, it would also undertake a 51 per cent. share of exploration costs from the beginning? Was not that the hump which had to be got over and which resulted in a goodly flow of applications afterwards?

My Lords, I cannot of course answer for the companies, but I think it more than likely, in view of the preparatory work required prior to applications, that decisions to apply were taken more than three weeks before the deadline. The Government have throughout been confident of a satisfactory response to the round.

My Lords, are the Government still pushing all applicants retrospectively to accept BNOC's 51 per cent. share in previous licences as a condition for favourable treatment on this occasion? Is Esso holding out against this condition and, if so, will this not cause delay in making the final allocations?

My Lords, I am afraid that I cannot answer for Esso at the moment, or indeed comment on any individual company's application during this confidential period. Her Majesty's Government will assess applications by taking into account all the published criteria.

My Lords, would the Minister admit that the confidential discussions that have already taken place have included pressure amounting virtually to threats on applicant companies to accept retrospective participation, including in at least one case a suggestion that senior executives of the companies might have their residents permits withdrawn?

My Lords, would the noble Lord agree that, if pressure is being put on these applicants in this manner, it is totally out of accord with every assurance that was given at the time of the debate on the nationalisation of North Sea oil? Will the noble Lord look into this as a matter of urgency and with great seriousness?—because, if it is true, it needs to be known, and if it is not true, it needs to be announced that it is untrue.

My Lords, we treat this matter with particular seriousness. If the noble Lord would like to put down a Question, I will of course answer it.

My Lords, since my noble friend said that on this issue it would be wrong for the Government to give details of confidential decisions, is it not right that the Government are unable to break that confidentiality at this stage?

My noble friend is absolutely right, my Lords, as he often is. These matters are now the subject of commercially confidential discussions with individual applicants, as I said. There are competing applications for many blocks and it would not be appropriate to comment at this stage.

My Lords, would the noble Lord agree that, while respecting commercial confidentiality, to use confidentiality as an excuse for the kind of pressure to which my noble friend referred would he totally improper?

My Lords, may I ask the noble Lord to confirm or deny that on about 12th October—namely, a week after the deadline closed—a letter was sent to certain applicants asking what was their attitude to retrospective acceptance of BNOC's share in existing licences?

My Lords, following the invitation to apply, the Government reviewed the optional arrangements for BNOC making its contributions and concluded that, as expenditure on development under fifth round licences was unlikely to arise until the early 'eighties, BNOC should by then be favourably placed to finance its share as expenses were incurred.

My Lords, may I ask my noble friend for an assurance that we will not shift from the 51 per cent. control of all licences for North Sea oil? Is he aware that I want to see the British people controlling North Sea oil and not private enterprise making a haul out of the whole job?

Yes, my Lords I am sure that there is a great deal in what my noble friend says. The Government, through BNOC, will get all the profits from its 51 per cent. share. If the companies pay on average 70 per cent. of their profits on their share, as we estimate they will under existing licences, then, with participation, the Government's total take would be perhaps about 85 per cent. from profits over the life of the field.

My Lords, may I ask the noble Lord to be so kind as to answer the question which I just put to him about the letter which, according to my information, was sent on about 12th October to a number of applicants asking what was their attitude to accepting BNOC's 51 per cent. share in licences already existing under previous rounds? If he does not know the answer now, will be find out and give it to the House?

On the question of the commercial confidentiality of these negotiations, is it not apparent from the questions that have been put to the Minister that some information is being given by the commercial companies to noble Lords? As the companies have no objection to the information being released, may I ask the noble Lord at least to undertake to consult them and make a statement later to the House about any conditions that may have been put to the companies as part of the negotiations?

My Lords, I will certainly bring what the noble Lord has said to the attention of my right honourable friend.