HC Deb 17 January 1977 vol 924 cc12-5
8. Mr. MacfarIane

asked the Secretary of State for Energy when he last had discussions with the Chairman of the British National Oil Corporation.

Mr. Bean

I see Lord Kearton very frequently.

Mr. Macfarlane

Is the Secretary of State aware that he should seek a further urgent meeting with the Chairman of the BNOC to convey to him the deep concern and mounting confusion that exists in the oil industry because the Chairman has failed so far to give a date to that industry for the time when BNOC will be operating in downstream petroleum activities?

Mr. Bean

I appreciate the hon. Gentleman's supplementary question, but I see the major oil companies almost as frequently as I see Lord Kearton. In fact, this point has never arisen. It has not arisen for the simple reason that we made it clear in our discussions with BP, Shell, Esso and others that it was not the intention of BNOC in the first stage of its development to go downstream. I have made that clear in the House and there is nothing secret about it. BNOC's interest and involvement in downstream strategy was to keep an eye on the development of that strategy so that the Government would be informed about downstream activity. BNOC would then, statutorily, be perfectly able to move downstream by Act of Parliament. I do not think that there is the uncertainty that the hon. Gentleman suggested in his supplementary question.

Mr. Canavan

Bearing in mind the need to provide more jobs for workers in oil-related activities in this country, will my right hon. Friend, in discussing with the BNOC the fifth round of licence talks, make it a condition that at least one of the oil companies shows an interest in the £14 million oil rig that is being built at the Marathon yard at Clydebank?

Mr. Bean

My hon. Friend will know that the use of jack-up rigs in the North Sea is limited and that prospects for the sale of the Marathon jack-up rig abroad are greater than its likely use in home waters. I am exceptionally glad to have been able to play my modest part, with the Secretary of State for Scotland, in the ordering of a jack-up rig. It is extremely important that we see oil not merely as something to be refined and sold but as a means by which we may build up a strong domestic industry.

Mr. Skeet

Does the right hon. Gentleman recognise that the participation agreements, particularly those with Shell and Esso, are a farce? In the one case BNOC will sell at market price and companies will buy back at exactly the same price. Why not eliminate the middle man? On grounds of confidentiality, does not the right hon. Gentleman recognise that the Corporation is acting in a dual capacity commercially or as agent for the Government, and will not this confuse its stance in both situations? How can the Corporation be completely confidential in the advice which it gives?

Mr. Benn

The hon. Gentleman is too old a hand to base a supplementary question on oil company Press releases. If he looks back, he will discover that the price agreement, which took six months to negotiate, is not as easy as he suggests. It requires that the oil companies will make clear their objectives in terms of refinery policy and maximising the balance of payments advantage to the United Kingdom. They have to demonstrate that to the Secretary of State as part of the agreement, including sale-back.

Mr. Skinner

How does my right hon. Friend explain why in the head office of BNOC there exist two pieces of paper, one giving BNOC the ability to purchase half the private oil company oil that is on tap and the other superseding and overriding the first piece of paper and saying that the oil company may have the ability to buy back? How does that fit in with the concept of taking over the commanding heights of the economy and selling off £500 million worth of oil, as announced in the mini-Budget? Why does not my right hon. Friend denounce these methods?

Mr. Benn

If my hon. Friend, who follows these matters carefully, reads the heads of agreement, he will see that they do not comprise what he calls two bits of paper. He will recognise that a planning agreement is involved and that, for the first time, the oil companies have entered into a treaty relationship with the Government in which their own policy is made explicit and the sale-back provision is linked to the implementation of that policy.

Mr. Gray

Will the right hon. Gentleman accept that BNOC is acting merely as a regulatory authority, which is what many of us said it should do, and that we therefore congratulate him? In his discussions with the Chairman of the BNOC, will he also point out that the competitive aspects of the petroleum companies in downstream activities leave no freedom for the Corporation to compete in that sector?

Mr. Benn

The hon. Gentleman is totally wrong, because BNOC will have in hand at its disposal between 35 million and 40 million tons of oil by the mid-1980s which would not be provided by regulatory authority. The hon. Gentleman supported a Government who gave licences to oil companies under which there was no guarantee that a single drop of that oil would be available to the United Kingdom or would be under the supervision of any British agency. That was a total betrayal of the trust which they should have exercised.