British National Oil Corporation (Hansard, 9 July 1979)

§ 4. Mr. Hannam
asked the Secretary of State for Energy when he plans to meet the chairman of the British National Oil Corporation.

§ 10. Mr. Eggar
asked the Secretary of State for Energy when next he will meet the chairman of the British National Oil Corporation.

§ Mr. David Howell
I see Lord Kearton regularly.

§ Mr. Hannam
Will my right hon. Friend confirm that at the end of 1978 only 28 per cent. of BNOC's North Sea oil was getting to our filling stations? Does not that fact, coupled with the fact that exploration activity has nearly halved since 1977, confirm that nationalisation does not necessarily prove to be to the benefit of the national interest?

§ Mr. Howell
I think my hon. Friend is asking me about the share of United Kingdom continental shelf crude going to British markets. The figure of 28 per cent. is not one that I would wish to confirm as part of the total, but I can tell him that, of the roughly 25 million tonnes being handled this year by BNOC—that is, excluding oil sold back to companies under the terms of some participation agreements—about 45 per cent. is presently expected to be sold to United Kingdom refineries. On the broader issue of BNOC, all its activities and finances are currently being reviewed and I hope to make a statement on the outcome of that review at the appropriate time.

§ Mr. Eggar
When my right hon. Friend next meets the chairman of BNOC, will he point out to him that there is no justification whatsoever for BNOC's role as a Government adviser, nor for its role as a major crude oil marketer? When he makes his statement, will he make that clear?

§ Mr. Howell
Those are precisely the matters that the Government are looking at in the review. When I make the statement on the matter, I shall give the Government's conclusions on those propositions.

§ Mr. Palmer
Will the Secretary of State assure us that he will look at the future of BNOC from a purely practical and empirical point of view and not on lines of doctrine?

§ Mr. Howell
Excessive doctrine is one of the difficulties—the curses, let us say— 8 under which this corporation was born. I agree that it is important to look objectively at the needs of the British people and the British nation as regards oil, free from assertions of dogma about what kind of organisation or institution is the answer.

§ Mr. Skeet
Will my right hon. Friend ensure that the review of BNOC is speeded up? Will he bear in mind two considerations—first, that special licence areas should not be granted to BNOC outside normal rounds; second, the fact that royalties are paid to the Chancellor of the Exchequer—that is, the Treasury—and not on account of BNOC?

§ Mr. Howell
I take note of those detailed points, but they are all matters falling within the scope of the review, and I cannot anticipate my statement on its outcome.

§ Dr. Owen
Will the right hon. Gentleman confirm that BNOC, because of its 51 per cent. participation agreement, was able to sell its oil back to Shell, Esso and Texaco on condition that it was retained in the United Kingdom market, and that it was able to negotiate to ensure that the firms' own 49 per cent. was retained in the United Kingdom market? Is he now satisfied, having looked at the figures, that BNOC did everything possible to protect the home market and that it is the export deals made by some other companies which have prejudiced our ability to get hold of North Sea oil?

§ Mr. Howell
I can confirm that BNOC has been encouraged to renegotiate some of its contracts in line with a more normal trading pattern and the more sensible price regime which now prevails in the British market than the one which we found when we came to office. [HON. MEMBERS: " Sensible? "] Certainly, because to keep prices and taxes suppressed leads directly to the shortages that we experienced in May. That is a more healthy position. As to being satisfied with the arrangements that have been made both by the major oil companies and by BNOC, which is of course a major oil company, all oil companies—BNOC was no exception—took certain views last year about the development of oil markets which, since they had limited information about what was to come, were overtaken 9 by events. In those events, many oil companies—again, BNOC is no exception—have found difficulties and have had to renegotiate their arrangements.