North Sea Gas

HC Deb 04 July 1967 vol 749 cc1545-8

3. Mr. Edward M. Taylor

asked the Minister of Power if he will make a statement on his discussion with the oil companies on the price for North Sea gas.

40. Mr. Peyton

asked the Minister of Power when he expects to make a statement on the price of North Sea gas.

51. Mr. Mikardo

asked the Minister of Power if he will make a further statement on the result of discusions with the North Sea producers on a reasonable price for North Sea gas.

Mr. Marsh

I cannot at present add to the statement I made in the House on 7th June.—[Vol. 747, c. 980–2.]

Mr. Taylor

Would not the right hon. Gentleman agree that the oil crisis in the Middle East has given the matter more urgency? When does he expect a decision to be arrived at, and when will the consumer get some benefit?

Mr. Marsh

The current negotiations are having no effect on the development of the fields, and there is no evidence that bringing gas ashore is being held up. The negotiations will be concluded as soon as everybody is convinced that the price being offered is a fair one.

Mr. Atkinson

Would my right hon. Friend agree that the price which he ultimately endorses should not yield more than 15 per cent. to the private oil companies who are investing in this development?

Mr. Marsh

I think that it is much more complicated than that. A number of factors are involved. I cannot look at this exercise as if it were an aircraft contract, or something of that sort. This is a question of exploration. I give my hon. Friend an assurance that we are very concerned to ensure that public shareholders are as much protected as private ones.

5. Mr. Eadie

asked the Minister of Power what is the estimated total costs of conversions and new pipelines connected with the utilisation of North Sea gas.

Mr. Freeson

About £400 million for conversion, and about £200 million for the Gas Council transmission system up to 1970. There will also be expenditure on area boards' pipeline systems, but these will be required for distribution of town gas as well as natural gas until full conversion has taken place.

Mr. Eadie

Is my hon. Friend aware that the figure of £2,000 million has been quoted for conversion and pipelines? Does not he agree that this is a substantial capital sum and that the prospects of cheap gas for the consumer must be seriously questioned?

Mr. Freeson

I do not know that the figure of £2,000 million is in any way a contradiction of the information that I have given. It may be that whoever has quoted this figure is concerning himself or herself with a longer period of development, for the pipeline transmission system. I was referring to developments up to 1970. Developments will continue well beyond that period.

Mr. J. H. Osborn

Can the Minister say how much of this cost will be borne from Exchequer funds, and whether it will be necessary to go to the open market?

Mr. Freeson

As the hon. Member knows, as a general practice it is not the policy of the nationalised industries to obtain their funds on the open market.

17. Mr. Webster

asked the Minister of Power what steps he will now take to accelerate supplies of natural gas from the North Sea to the Gas Council; and how much will now be supplied in the current year.

Mr. Marsh

The rate at which this gas can be made available depends on the construction of pipelines and other works, which is being pressed forward with all speed. Deliveries to the Gas Council in 1967 should be well over 100 million therms.

Mr. Webster

When will the price be increased?

Mr. Marsh

As soon as he settlement has been reached.

Mr. Atkinson

In view of the relationship between the price of supply and the fact that the Minister has said that the yield from the capital involved will be more than 15 per cent., will he tell the House that he is not prepared to endorse agreements which will give the investors more than 30 per cent. return on their capital?

Mr. Marsh

I do not think that I should be placed in a position in which one side to the negotiations is negotiating in public while the other side can negotiate in private. I have given no information about the minimum return. That is being negotiated between the Gas Council and the companies.

19. Mr. Hector Hughes

asked the Minister of Power if he will include in the licences which he gives to persons and companies to drill for oil and gas in the North Sea a direction that the relevant oil refinery and conduit pipes be built and laid in the part of Great Britain nearest to the source of oil and gas so found.

Mr. Freeson

No, Sir. Decisions on these matters must take account of the circumstances of the individual case, and are properly the responsibility of the licensee, subject to normal planning controls.

Mr. Hughes

Does not the answer to this Question and the answer to the previous Question show that the drilling for oil in the North Sea has got into a very disorganised state? Is my hon. Friend aware that some of the repairs to pipes and drills are being sent to Europe instead of to British workshops? Will the Minister rectify that?

Mr. Freeson

I am not aware that there is any disorganisation. On the second point, I have answered a previous Question about this from my hon. and learned Friend, and the answer today must be the same—that the repairs are done at the most convenient place.