§ The Secretary of State for Energy (Mr. Anthony Wedgwood Benn)With permission, Mr. Speaker, I will make a statement about the conditional award of blocks on the United Kingdom continental shelf in the sixth licensing round.
As I announced on 20 November last, all 46 blocks put on offer in the sixth round were covered by applications lodged by that date. After detailed discussion with the applicants and consideration of the applications, I have decided to make conditional awards of licences for 42 blocks. The list of applicants to whom the conditional awards are being made and the blocks awarded to each applicant are being circulated in the Official Report. Not all 46 blocks applied for will be awarded, as our examination has shown that certain applicants would accept particular blocks only if they were successful on others which could not be offered.
The awards made are—as with the fifth round—subject to two main conditions: an agreement between the Department and the respective licensees, including the British National Oil Corporation, of an obligatory work programme for the exploration of the blocks to be licensed and the conclusion by BNOC and each group of co-licensees, with my approval, of a joint operating agreement based on the guidelines published in August 1978. These will be completed as soon as possible.
The award of licences, when confirmed, will extend activity on our continental shelf into as yet largely unexplored areas north-west of the Shetlands and in the South-Western Approaches. The licences will further advance Britain's control over its oil and gas resources. In these respects, the main new feature of the licensing round—the opportunity for applicants to make offers over and above the standard terms—has been a success. The offers made will enable BNOC's share of exploration and appraisal costs to be carried, in whole or in part, in over half of the blocks. In several blocks, the public sector has an opportunity to acquire equity interest in excess of 51 per cent. BNOC has also been offered options by some of its prospective partners in respect of any oil or natural gas liquids that are found under licence.
30 The readiness of companies to make these offers and the large proportion of blocks applied for and awarded are further evidence of the success of the Government's policy for our continental shelf.
§ Mr. Tom KingThe right hon. Gentleman omitted the last sentence on the copy of the statement supplied to me, in which he said that he was sure that the House would welcome the successful response that there has been from the companies. However, is the Secretary of State aware that, while he may be satisfied with the outcome of the sixth round, all those with an understanding of the real situation find it extremely disappointing? It is particularly serious, coming, as it does, after last year's record of the halving of exploration drilling in the North Sea. Is the Secretary of State further aware that he inherited his present responsibility when hopes were very high for the North Sea and that the statement, with its confirmation of how far the prospects have dimmed, is a fitting epitaph on his period of office and the damage that has been done by his policies?
§ Mr. BennWhen the Government came into office there was no petroleum revenue tax, there was no obligation to sell the oil, and the British sector—[Interruption.] The hon. Gentleman had better learn to take it if he is going to give it. There was no control over the oil. The profit take from this round, which is more successful than the previous round, will be 85 per cent. of the profits accruing to the British people. The hon. Gentleman should seek better advice than that which he gets from the oil companies on the matter.
§ Mr. StoddartWe on the Government side of the House welcome the statement. I particularly welcome what my right hon. Friend said about the advancement of control by Britain over its oil reserves. However, there are claims coming from the EEC as to landing rights and where the oil should be landed. Will my right hon. Friend give his assurance that Britain will retain absolute control over the oil reserves and where the oil is landed?
§ Mr. BennI confirm that the Government remain firmly of the view, and will uphold that view, that the control of our oil policy must remain with the House of Commons. That includes the right to insist on the landing of the oil in the United Kingdom, the right to determine the rate of depletion of that oil, and all the condition—including the role of BNOC—in that respect. The view is vital to the British national interest.
§ Mr. PardoeWe welcome the opportunity that the right hon. Genleman's statement has given for the Conservative Opposition to reaffirm their determination to give away Britain's oil to those from whom the Government rescued it. We hope that the Secretary of State will continue with his present policies in that respect. Will the right hon. Gentleman say what proportion of total exploration costs in this round will be borne by BNOC and what proportion by private oil companies?
BennI cannot answer the latter part of the hon. Gentleman's question until the discussions between BNOC and the oil companies have taken place. I am grateful to the hon. Gentleman for giving me the opportunity to tell the House that 60 per cent. of this round is public sector and between 65 per cent. and 70 per cent. are British companies. The public sector stake in the North Sea has been doubled from 12½ per cent. to 25 per cent.—that is total ownership—in the five years since the Government have been in office.
§ Dr. BrayCan my right hon. Friend say what consideration he was able to give to the employment of British contractors and the use of British offshore supplies in the granting of the current round of licences? Is he aware that there is continuing acute difficulty in the process plant industry, which is the general background to the offshore oil supply industry?
§ Mr. BennWe are trying to do our best, but, as my hon. Friend will know, I am under threat from the Commission in relation to action on the interest relief grant introduced by the last Conservative Government and even on the operations of the Offshore Supplies Office. These measures have brought jobs and employment to this country and particularly 32 to Scotland, and it is right that we should take a robust line on them.
§ Mr. RostIs it not clear from the serious decline in exploration activity last year and the way in which some of the experienced oil companies have been deliberately frightened out of the sixth round licences that the Secretary of State is more concerned with extending nationalisation for doctrinaire Socialist reasons than with protecting the British interest, which is to see that we get the oil?
§ Mr. BennIf the hon. Gentleman thinks that any oil company could be frightened away from the North Sea after what has happened in Iran, and at a time when OPEC Ministers are meeting in Geneva, he needs to reexamine the realities of the situation. Everyone knows that the high drilling figure in 1977 was due to quite a different factor, namely, that the drilling requirements under the fourth round had to be completed. It is in our interest to deplete and develop North Sea oil at a rate that meets our national needs and not be forced to deplete it at an explosively high rate simply because that may be in accordance with the desires of the oil companies. Even after having taken a tough line on petroleum revenue tax, rate of depletion, and so on, we still have the most successful round ever in the one that I have just announced.
§ Several Hon. Members rose—
§ Mr. SpeakerOrder. I propose to call those hon. Members who have been seeking to catch my eye since the Secretary of State finished his statement.
§ Mr. MaddenCan the Secretary of State say to what extent the commercial behaviour of applicants is taken into account when licences are issued? Is he concerned, for instance, about allegations that companies that have made vast incomes from North Sea oil exploration are using some of that money to finance the closure of newspapers and that other similar companies are threatening to close newspapers with the use of the financial support that they have gained from the North Sea?
§ Mr. BennI must tell my hon. Friend that the other activities of companies with North Sea interests have not been a feature, but their conduct in respect 33 of honouring their obligations in terms of full and fair opportunity, a readiness to train United Kingdom personnel, honouring the memorandum of understanding on offshore unionisation, and in relation to the assurances that I have sought from the oil companies that they would not exploit the world oil shortage to make profits on the spot market, have been taken into account.
§ Mr. MacfarlaneIs the Secretary of State aware that many will consider that he misled the House when he said that the landing of oil in the United Kingdom would be strictly controlled and limited? May I draw his attention to a written answer that his Minister of State gave me about 10 days ago, in which he indicated that British exports had increased to more than 52 per cent. by January of this year?
§ Mr. BennI referred to the approval of exports in reply to a recent question. We have never restricted increased exports, but the right that the oil should be landed in the United Kingdom is one that we regard as important. The subsequent disposal of the oil is a matter for our discretion, but we are not prepared to see anyone challenging our right that the oil discovered on the continental shelf should be landed in the United Kingdom.
§ Mr. William HamiltonIs my right hon. Friend aware that the British people will welcome any steps that he takes to ensure that their interests, as against those of the private oil companies, are protected? Will be give an assurance that the Government will not take any steps to expedite the exploitation of oil that might create more problems than they solve? Can he say anything further about the exploitation that is taking place, or is about to start, in the South-Western Approaches?
§ Mr. BennThere are blocks in the South-Western Approaches that have been opened up by the settlement of the dividing line between ourselves and France. These are important developments, which will be widely welcomed. I am grateful for what my hon. Friend said in support of the Government's decision to retain control of the development of our resources, rather than leaving that to the oil companies to determine alone. Our rights must include the right to deplete 34 the oil at a rate that is of benefit to the United Kingdom. That must necessarily remain a matter entirely within the responsibility of the Government and the House.
§ Mr. AdleyDoes the right hon. Gentleman recall that some months ago I drew to his attention the difficulties suffered by fishermen in and around my constituency by the activities of some of the oil companies in the earlier stages of the exploration process? Can he tell the House what specific assurances he has obtained from the oil companies that the rights of fishermen will be fully protected and that consultation will take place before drilling starts?
§ Mr. BennMy right hon. Friend the Minister of State is having a meeting shortly on this matter. I should like to write to the hon. Gentleman so that I may give him a precise answer. I recognise that there is much interest not only in offshore pollution but in the rights of fishermen, and that they should not be disturbed by oil exploration in a way that damages their interests, though we must retain our rights to explore for oil.
§ Mr. HardyCan my right hon. Friend confirm that work has not yet started, or has only recently been started, on blocks for which licences were granted by the last Conservative Government more than five years ago? In the light of that, will be maintain his view that a work programme wil have to be adhered to?
§ Mr. BennI strongly share my hon. Friend's view about the work programme. These are long-term licences, lasting for 40 years, and any Government would be entitled to feel that if they are to award a licence they must be sure that exploration work is done, so that they know what resources are available. That, too, is a vital national interest.
§ Mr. CryerWill my right hon. Friend accept that his statement deserves the support of the House, as does, in particular, his clear determination to resist the onslaught of the EEC, which appears intent on taking over control of British oil resources? Can he also say whether, in the 60 per cent. public sector that he announced, there will be a strong attempt to use British divers in any work that is involved? My information is that over 35 the past few months the work available to British divers has diminished and that other divers have been brought in from outside to avoid tax payments and so on. Does my right hon. Friend share my expectation that the public sector should show a more responsible attitude?
§ Mr. BennThe public sector has been good in employing contractors and others from this country, and the diving interest is one in which my right hon. Friend the Minister of State has particularly interested himself. On the EEC point, we shall be debating the matter later tonight, before I leave for the Council meeting in Brussels tomorrow.
§ Mr. SkinnerIs the Secretary of State aware that the Tory spokesman, on behalf of the "European" party, is speaking not merely for the oil companies but for the Common Market? Is he aware that the Common Market is longing to see a Tory Government returned so that it can get its hands on a good deal of our oil? Will my right hon. Friend therefore give a pledge that in any forthcoming election campaign, before the end of the year, he and others will be making strong play of this issue in terms of the Common Market and the British interest?
Will my right hon. Friend accept that he has done remarkably well in telling his civil servants to get out the proposals that he has announced, as we have been reading consistently in the past few days that top civil servants have been clearing their desks in readiness for a Tory Government?
| Following are the sixth round conditional awards: | |
| Group | Block(s) |
| BNOC and Phillips Petroleum Exploration UK Ltd. | 73/7 |
| Hispanoil UK Ltd. | |
| Century Power & Light Ltd. | |
| BNOC and Phillips Petroleum Exploration UK Ltd. | 13/30 |
| Fina Exploration Ltd. | |
| Agip (UK) Ltd. | |
| Century Power & Light Ltd. | |
| Ultramar Exploration Ltd. | |
| The British Electric Traction Company | |
| BNOC and Occidental of Britain Inc. | 13/28 |
| Getty Oil (Britain) Ltd. | |
| Allied Chemical (GB) Ltd. | |
| Thomson Scottish Petroleum Ltd. | |
| BNOC and Monsanto Ltd. | 73/9 |
| Amerada Exploration Ltd. | |
| Charterhall Oil Ltd. | |
| BNOC and Tenneco GB Ltd. | 20/6 |
| Albright and Willson Ltd. | |
| BNOC and Ultramar Exploration Ltd. | 13/29 |
| Houston Data Venture (UK) Ltd. | |
| Canadian Pacific Oil & Gas of Canada Ltd. (UK) |
§ Mr. BennI am grateful to my hon. Friend for what he said on every score. I have for some time puzzled how the Conservative Party could support both the Commission and the oil companies. The reason is that by using the Common Market the oil companies hope to escape from the control of the oil policy by the United Kingdom Government.
§ Mr. EnglishHas my right hon. Friend yet had a chance to read an article by a bank economist in this morning's Financial Times? In particular, does he agree that the present system of taxation and of securing other public receipts is unfair to the smaller companies and to people who wish to develop the smaller fields? Does he further agree that if BNOC were dissolved, it would be difficult to keep its assets in British, never mind public, ownership? When he quotes a figure of public ownership, what proportion of the assets of BNOC and BP is he attributing to the public?
§ Mr. BennIn view of the detail in that question, I should like to consider a proper answer to it. Taxation matters are primarily for the Chancellor. By introducing the British National Oil Corporation we have achieved a genuine increase in equity holdings in the North Sea from 12½ per cent. to 25 per cent. by the announcement that I have made today. That leaves outside the BP position, which is rather special and different. We have tried, in the new tax proposals announced last summer, to take account of the needs of small companies.
| Group | Block(s) |
| BNOC and Mobil North Sea Ltd. | 209/3, 209/13, 16/18 |
| BNOC and Unocal Exploration & Petroleum Co. Ltd. | 13/12 |
| BNOC and Arpet Petroleum Ltd. | 20/1, 14/26 |
| BNOC and Pan Ocean Oil (UK) Ltd. | 16/3b |
| Bow Valley Exploration (UK) | |
| Kerr McGee Oil (UK) Ltd. | |
| LL & E (GB) Ltd. | |
| Siebene Oil & Gas (UK) Ltd. | |
| Canadian Ashland (UK) Ltd. | |
| BNOC and Swedish Petroleum Ltd. | 73/1 |
| BNOC & Chevron Petroleum Co. Ltd. | 73/8 |
| ICI Petroleum Ltd. | |
| BNOC and Tricentrol North Sea Ltd. | 208/23 |
| Blackfriars Oil Co. Ltd. | |
| Hamilton Bros. Oil Co. (GB) Ltd. | |
| Hamilton Bros Petroleum (UK) Ltd. | |
| Hamilton Bros Exploration (UK) Ltd. | |
| Hispanoil (UK) Ltd. | |
| Oil Exploration (Scotland) Ltd. | |
| Swedish Petroleum Ltd. | |
| BNOC and Burmah Oil Exploration Ltd. | 20/2 |
| Charterhouse Petroleum Development Ltd. | |
| Petroswede (UK) Ltd. | |
| Canadian Industrial Gas (UK) Ltd. | |
| DSM Hydrocarbons Ltd. | |
| Norsk Hydro Oil & Gas Ltd. | |
| BNOC and Amoco UK Petroleum Ltd. | 85/28, 72/20, 73/16, 85/23, |
| BGC | 85/24 and 87/11 |
| Mobile North Sea Ltd. | |
| BNOC and BP Petroleum Development Ltd. | 208/15 |
| BNOC and Gulf Oil Corporation | 209/6 |
| BNOC and Placid Oil (GB) Ltd. | 74/2,73/11 and 73/12 |
| Ensench International Exploration Inc. | |
| BGC | 42/27, 47/3c, 47/4b and |
| Amerada Exploration Ltd. | 47/9b |
| Texas Eastern (UK) Ltd. | |
| BNOC and BGC | 208/19, 206/3 and 208/24 |
| Amoco UK Petroleum Ltd. | |
| BGC | 214/30 |
| BGC | 74/1 |
| BNOC and Cluff Oil Ltd. | 20/8 |
| CCP North Sea Associates Ltd. | |
| Stratton Oil Exploration | |
| BNOC and Total Oil Marine Ltd. | 208/26 |
| Deminex Oil and Gas (UK) Ltd. | |
| Pict Petroleum Ltd. | |
| BNOC and Shell (UK) Ltd. | 209/7 and 206/2 |
| BNOC and BP Petroleum Development Ltd. | 85/29 |
| Total Oil Marine Ltd. | |
| Elf Oil Exploration & Production Ltd. | |
| Aquitaine Oil (UK) Ltd. |