Lord CAMPBELL of CROYMy 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 whether there have been any difficulties or disputes over the delineation of individual oilfields in the United Kingdom Continental Shelf for the purposes of legislation.
§ The PARLIAMENTARY UNDER-SECRETARY of STATE, DEPARTMENT of INDUSTRY (Lord Melchett)My Lords, discussions are proceeding on the delineation of the oilfields which have so far been declared commercial with the licensees. Agreement has already been reached on the delineation of some; in the case of the remainder I see no obstacles to a satisfactory outcome.
Lord CAMPBELL of CROYMy Lords, I thank the noble Lord for his Answer. Since petroleum revenue tax is to be levied on each oilfield as a separate unit and not on a company's profits from the Continental Shelf, may I ask whether the noble Lord is aware that uncertainty whether a reservoir constitutes one, two or more fields is a crucial factor in deciding whether it is worth while to extract oil at all? This arises because of the separate fixed tax allowance for each recognised oil field.
§ Lord MELCHETTMy Lords, as the noble Lord knows, it was made clear during the passage of the Oil Taxation Act that the decision on the extent and 1044 delineation of an oilfield would be made on geologicsal. I am not aware that this has given rise to any difficulties.
§ Lord HAILSHAM of SAINT MARY-LEBONEMy Lords, is there any method of deciding in the case of disputes? Is a dispute to be decided by the courts? If so, Scottish or English? Or is it to be decided by arbitration; or by the fiat of the Government?
§ Lord MELCHETTMy Lords, as was made clear during the passage of the Bill through Parliament, the decision of the Secretary of State is final in this matter.
Lord CAMPBELL of CROYMy Lords, does the noble Lord agree that the geological criteria for delineation of fields can produce different results since their application cannot be certain or precise?
§ Lord MELCHETTMy Lords, I am not aware that any substantial difficulties have arisen so far and in some fields the delineation has been agreed.