HC Deb 17 January 1967 vol 739 cc1-5
1. Mr. Gwilym Roberts

asked the Minister of Power to what extent gas supplies from the North Sea are being held up by foreign companies refusing to agree to the British Government's price per therm; and what steps he is taking to get over this difficulty.

12. Mr. Patrick Jenkin

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

22. Mr. Peyton

asked the Minister of Power what action he intends to take to bring about a settlement of the dispute over the price of North Sea gas.

The Minister of Power (Mr. Richard Marsh)

Negotiations between the Gas Council and the licensees, both British and foreign, are continuing. There is no evidence that gas supplies from the North Sea are being held up.

Mr. Roberts

Would not my right hon. Friend agree that the difficulties with these private conferences emphasise once again the need for a national Natural Gas Corporation? Can my right hon. Friend at this stage estimate the foreseeable output and usage of this gas?

Mr. Marsh

In reply to the first part of the question, I have always thought that the task of the Ministry of Power was virtually to fulfil the functions which my hon. Friend is suggesting for a national power authority. With regard to the second part, no one yet knows how much natural gas there is under the North Sea. It will certainly be in excess of 1,000 million cu. ft. a day by 1970.

Mr. Jenkin

Does not the Minister recognise that the quantity that will be available for consumers in this country will depend to a very large extent on the price that the Gas Council is prepared to pay? How much longer will the country have to wait until we have an answer to this critical and, I admit, difficult question?

Mr. Marsh

I think that the negotiations are progressing favourably and fairly between the two parties. Clearly, a sensible price for North Sea gas would be one which optimised production.

Mr. Barber

In the light of the wording of the Question, will the right hon. Gentleman confirm that the Government welcome the infusion of foreign capital and the provision of foreign "know-how", and that his objective will be to reach a price which will provide an incentive to the operating companies to find and to deliver the maximum amount of gas?

Mr. Marsh

Of course, we are pleased to have this level of foreign investment in this exercise, and, of course, the price fixed would have to be one which was sufficiently fair to the producers to persuade them to wish to continue producing. On the other hand, there are consumer interests as well. I have never regarded this as a set of negotiations which were not capable of being concluded in the interest of both parties.

Mr. James Johnson

Since we are dealing with enormous sums of money to be paid by the Gas Council—which is taxpayers' money in the end—can my right hon. Friend tell us, if we were to pay 3d. per therm instead of 2d. per therm, what would be the cost in payments to the Gas Council over the next twenty years?

Mr. Marsh

I could not answer that question because there is no particular relevance in the figure of either 2d. or 3d.

Mr. Peyton

May I ask the Minister to take this matter very seriously? Nothing would be more tragic for this country than that this opportunity were lost by a desire to depress prices and discourage an enterprise of exploration which has been so auspiciously begun. The Minister has enormous responsibility to shoulder in this matter.

Mr. Marsh

We accept entirely that these negotiations are very important for the country in terms of the vast sums involved. So far, however, the negotiations have not taken very long. This is an incredibly important issue, as hon. Members on both sides accept. As far as I know, there is no dissatisfaction on either side with the way the negotiations are continuing, and there is no purpose in producing a picture of great difficulty which does not exist at the moment.

7. Mr. Hector Hughes

asked the Minister of Power what is the cost to the national Exchequer of the present drilling for oil and gas in the North Sea under licence from him; and in what ways the money is spent.

Mr. Marsh

About £41,000 has been spent in the period from 1st April, 1964, to 31st December, 1966, on the issue of licences and on related administrative activities.

Mr. Hughes

How does the cost balance the saving to British users of oil and gas? If there is no such saving, are not these licences an economic loss to the British consumers?

Mr. Marsh

They are certainly not an economic loss. We cannot at the moment work out the saving in terms of a saving in our balance of payments because we do not know how much gas we will have and, therefore, how much we will be selling. The cost of granting and administering licences at present amounts to less than £20,000 a year, but the payment for licences has so far amounted to £2,700,000.

Sir S. McAdden

I am grateful to the right hon. Gentleman for giving those figures. Will he make it abundantly clear that the trifling amounts involved in the issue of licences is nothing compared with the tremendous risk of capital that is involved in this exploration?

Mr. Marsh

It is clear that there has been a significant commercial risk involved in this matter, but that is exactly what an entrepreneur undertakes when he enters activities of this sort. It must be said, however, that the level of risk in this particular exercise is probably as low as, if not lower than, any similar exploration in the world.

14. Mr. Hector Hughes

asked the Minister of Power if he will give details of the provisions in licences he grants to persons and companies to drill for oil and gas in the North Sea with special reference to any benefits such drilling may confer on North-East Scotland.

The Parliamentary Secretary to the Ministry of Power (Mr. Reginald Freeson)

The licences contain no provisions related specifically to North-East Scotland or any other part of Great Britain.

Mr. Hughes

Cannot my hon. Friend give some further information about these licences? For instance, is there any provision in the licence requiring the owners of rigs to get repairs done in this country instead of, as happened recently, sending to Germany or other Continental countries for repairs to be done?

Mr. Freeson

On the specific point that my hon. and learned Friend raises, I should have thought it far better to leave it to the people in charge to get the repairs undertaken as rapidly and efficiently as possible from the point of view of safety. Other conditions are laid down in line with the model clauses contained in the Petroleum (Production) (Continental Shelf and Territorial Sea) Regulations, 1964, which cover such matters as payments, working obligations, proper methods of operation, approval for wells, safety of workers, keeping of records, etc.