Gas-gathering Pipeline (Hansard, 27 April 1981)

§ 13. Mr. Skeet
asked the Secretary of State for Energy if he will make a further statement on the North Sea gas-gathering pipeline.

§ Mr. Gray
The gas-gathering organising group continues to make good progress with the technical work necessary before construction can start. It gave a presentation on 3 April to representatives of companies which might wish to participate in the project, and is now preparing specific proposals for their consideration.

§ Mr. Skeet
Does my hon. Friend agree that there is little point in talking about raising finance for the project until the price of methane and ethane has been agreed and settled, and futhermore, until we are satisfied that the fields that are likely to be connected to the line will receive development approval?

§ Mr. Gray
Negotiations are taking place with ethane and methane producers, but they may be protracted, and we are looking to the BGC and the British National. Oil Corporation, which are acting as wholesalers, to negotiate with producers in the usual way.

§ Mr. William Hamilton
What prospect is there of agreement with the Norwegians this week over their gas being pumped into our lines? If the hon. Gentleman fails to get agreement with the Norwegians, can he produce a financial package attractive to domestic investors in this country?

§ Mr. Gray
As we have made clear, the viability of the line does not depend on Norwegian gas. When I meet Mr. Norvik this week I shall tell him that, if our gas-gathering line is ready before the Norwegian line, which we anticipate, our offer to take gas in the early years is still open. As I stated in my main answer, the organising group has made a presentation which is being considered by the banks and economically interested parties.

§ Mr. Eggar
Will my hon. Friend confirm that the gas-gathering pipeline remains an overriding priority for his Department and that there is no reason why a combination of banks, producers and gas users should not enable it to be financed privately?

§ Mr. Gray
My hon. Friend is absolutely right. From the outset we envisaged a joint venture, and we have no reason to believe that it cannot be achieved.

§ Mr. Merlyn Rees
Is the Minister aware that we hope that the discussions with the Norwegians will go well because it is important for us to work together on the scheme? Although we are informed that the technical side of the scheme is going well, it is finance that matters. Can the Minister confirm that the financiers are not prepared to go further unless there is a guarantee from the Government, quite apart from the reasons given by the hon. Member for Bedford (Mr. Skeet)? Is he aware that a guarantee has been given before and that it need not affect the public sector borrowing requirement? Does he agree that the scheme should not fall behind because the Government are not prepared to give a guarantee?

§ Mr. Gray
As I said, we are having discussions about Norwegian gas. The recommendation from the Norwegian energy department to its Government is that Norwegian gas should be transported to Norway, but it is hoped that we may get it in the early years. Everything is going according to plan on the technical side, and the banks have produced schemes which are being considered and which are not ruled out because of the need for guarantees. Some articles in the press have been misleading. We have seen it as a joint public and private enterprise, and have no reason to believe that that cannot be achieved.