HC Deb 14 January 1980 vol 976 cc1187-8
7. Mr. Dykes

asked the Secretary of State for Energy what priorities he will establish in the objectives of the seventh round of North Sea oil exploration licences in terms of future national requirements and the criteria for applicant companies.

The Minister of State, Department of Energy (Mr. Hamish Gray)

The priority will be to encourage the exploration for, and development of, our oil and gas resources in a thorough, responsible and timely manner.

Mr. Dykes

Will my hon. Friend the Minister of State say a little more, specifically in the light of the ever-spiralling cost of drilling, about what special incentives he envisages for smaller British companies and to deal with the more marginal exploration areas?

Mr. Gray

It is hoped that smaller British companies will have a very useful part to play in the seventh round. While there are no particular incentives for them to involve themselves in the seventh round, we have reason to believe that many of them will be part of consortia made up of small companies and some with larger ones.

Mr. Race

Given the enormous proportion of our oil requirements which will be provided from the North Sea in the 1980s—indeed, we shall have a surplus—will the Government follow a policy of allowing our oil resources to be depleted slowly? Further, will the Minister give an assurance that North Sea oil will not be sold forward of production in order to finance tax cuts for the rich?

Mr. Gray

My right hon. Friend the Secretary of State has already touched on the question of depletion policy, and I can confirm that this is a matter into which we will not be rushed. It is of vital importance for the years to come, and it is essential that we reach the proper conclusions. As for the second part of the hon. Gentleman's question, I do not in any way agree with the assumption which he makes.

Mr. Sproat

What consideration are the Government giving to requiring companies to make cash bids in the seventh round, and what thoughts has he on the fact that such cash bids would have to come out of fixed exploration budgets, which might cause smaller companies to be extremely hesitant about entering bids and, indeed, slow down any exploration by any company?

Mr. Gray

My hon. Friend makes a substantial point at the end of his question. We have considered the matter of auctions. We have no commitment to include auctions in the seventh round. We have not, however, ruled them out for the future, though the House will appreciate that one has to be very cautious in these matters, since the mere fact of auctioning might rule out some very desirable offers.

Mr. Douglas

How does the Minister propose to operate the agreement between the Department of Energy and the United Kingdom Offshore Operators Association in respect of ensuring that British companies get full and fair opportunity? How does the Minister propose to operate that in conjunction with the rundown of the Offshore Supplies Office in Glasgow?

Mr. Gray

In the seventh round the record of companies will obviously be taken into consideration, and the way in which they have previously observed the full and fair opportunity which results from the activities of the Offshore Supplies Office will be taken into account. The hon. Gentleman asks about the rundown of the Offshore Supplies Office in Glasgow. This has been a rationalisation created by the Offshore Supplies Office itself. In fact, the new Offshore Supplies Office set-up in Glasgow will be stronger than that which we inherited.