HC Deb 07 November 1967 vol 753 cc807-10
4. Sir G. Nabarro

asked the Minister of Power whether he will make a statement concerning negotiations for determination of the price of North Sea gas.

19. Mr. Palmer

asked the Minister of Power if he will make a statement on the price to be paid for the purchase of North Sea gas.

32. Mr. Lubbock

asked the Minister of Power when he expects agreement to be reached on the price scale for North Sea gas.

Mr. Marsh

Negotiations are continuing and I will make a statement when the main issues have been resolved.

Sir G. Nabarro

Is it not a fact that these negotiations have been continuing for nearly two years, with the Minister sitting in the seat of arbitration? In view of their protracted character, would it not be fair to say that the development of North Sea gas is being seriously prejudiced by the delay? Cannot the right hon. Gentleman reach a conclusion at an early date?

Mr. Marsh

On the point about the development of North Sea gas, there is no foundation whatsoever for the hon. Gentleman's statement. All aspects of development are taking place on time. They are faster this year than they were last year, and they were faster last year than the year before. These are long but very important negotiations. I see no point in reaching a quick answer if it is the wrong one.

Mr. Palmer

I appreciate my right hon. Friend's problems in this matter, but does he realise that the failure to determine a price for North Sea natural gas is making it very difficult for accurate calcula- tions to be made for the future in all the power industries?

Mr. Marsh

No; there is no support for that whatsoever. Calculations have been made on the basis of levels of price which would be tolerable. The development is taking place. I would hope to see these negotiations drawn to a conclusion by around the end of the year, but they are very big and very important, and it is right that they should be argued properly.

Mr. Lubbock

Is the Minister aware that, according to estimates prepared by the chemical industry, £20 million a year could be saved by the replacement of naphtha by natural gas in chemical processes? In view of this enormous saving to our balance of payments, would it not be desirable to reach a conclusion on price as quickly as possible so that industry can use this gas?

Mr. Marsh

Of course, we want to reach a conclusion on the price as quickly as possible, and we will do so. But if the price had been fixed six months ago, the rate of build-up of North Sea gas would have been no faster. There is no truth in the suggestion that the argument about price is holding up exploitation of the fuel.

Mr. Kelley

Would my right hon. Friend agree that the difficulties with which we are now faced stem from the conditions on which the concessions were granted, and that if the Government had reserved to themselves the right to fix the price having regard to all the capital expenditure in developing the project we should not be faced with the present difficulties?

Mr. Marsh

No. I think that if we were to look at the matter again there might be a slightly different Act; but I do not think that it is unreasonable. These are highly complex negotiations. There is a great deal of technical argument about them. We do not know what the capital costs are because they have not been incurred. The negotiations are not taking any longer than any other negotiations.

Mr. Peyton

Would the right hon. Gentleman bear in mind that, with the Dutch areas of the North Sea now becoming available for drilling, there is a real danger that this country may lose the very considerable start which it had? Will he give an undertaking that he will ensure that the price is fixed with speed and at such a level as to encourage a really intensive programme of exploration so that this country can begin to cash in on the first bit of luck it has had for years?

Mr. Marsh

It is certainly the intention of the Gas Council, which is responsible for the negotiations, to ensure that the price is fair and encourages exploitation. The trouble is that we have been arguing about what "fair" means.

Sir G. Nabarro

It is all very dilatory.

20. Mr. Palmer

asked the Minister of Power when he will bring in legislation for the establishment of a publicly-owned National. Hydrocarbons Commission for the exploitation of North Sea gas.

Mr. Marsh

I am considering this proposal.

Mr. Palmer

Would my right hon. Friend not agree that the early insistence on a large segment of public ownership in natural gas would assist him materially in his dealings with private oil companies? Secondly, has he noted the decision of the Scarborough Labour Party conference?

Mr. Marsh

I am sure that my hon. Friend will give me credit for attending the same party conference as he does. As for how far a greater degree of public participation in the North Sea would have helped us reach a settlement, of course, it is not always axiomatic that nationalised industries are that much more amenable to Ministers than private industry. The important point is that this proposal has been suggested. It is an interesting one. A great deal more needs to be done on it, and I am looking at it.

Mr. Emery

Will the Minister make it clear that, in any consideration, there would be no expropriation of the rights obtained by private enterprise in spending the risk capital which it has in the North Sea? Secondly, will he make it clear to the nation how the Government would attempt to obtain between £200 million and £500 million to finance further exploration if private enterprise had to withdraw?

Mr. Marsh

Clearly, the Government are not concerned with expropriating anything from anyone at this stage. [HON. MEMBERS: "Oh."] There are occasional fiscal adjustments, but never expropriations—[Interruption.] Clearly, I cannot give long-term guarantees of what any Government might do in future legislation.