Gas-gathering System (Hansard, 8 June 1981)

§ 3. Mr. Douglas
asked the Secretary of State for Energy whether he is satisfied with the rate of progress in establishing the gas-gathering system.

§ 19. Mr. William Hamilton
asked the Secretary of State for Energy if he will make a further statement on the development of the gas-gathering pipeline project.

§ 21. Mr. Rost
asked the Secretary of State for Energy when he expects negotiations on finance for the gas-gathering pipeline to be complete.

§ Mr. Gray
Good progress is being made with technical work, both offshore and onshore. The project remains on schedule for completion in 1985. As regards the separate question of financing, the organising group is now in further contact with companies that might wish to participate in the project, with a view to seeking commitments in principle from those companies within the next few weeks.

§ Mr. Douglas
Will not the Minister be a bit more straight with the House and say that there is considerable delay in the project, which has now slipped from 1984 to 1985? He should state clearly the exact nature of the financing of the project. The Government are holding it up lest it appear as an element in the public sector borrowing requirement.

§ Mr. Gray
The hon. Gentleman is misrepresenting what has already been said in the House. There is no question of the project's being held up. Everything on the physical side of the gas-gathering project is proceeding well. I have tried to explain as clearly as I can that consultations are taking place—this week, as matter of fact—between the organising group and important companies that may wish to participate in the project. The completion date that was given initially, of October 1984-spring 1985, is still achievable, and the Government have every hope that the project will proceed in the very near future.

§ Mr. Hamilton
Can the Minister state categorically that the banks are willing to take part in financing the project? Will he give an assurance that this vital project will not be jeopardised by the Government's dogmatic assertion that, whatever the finance, it shall not be a burden on the public sector borrowing requirement?

§ Mr. Gray
I think that the hon. Gentleman will agree that banks normally prefer to see the whole financial package in place before they commit themselves. If he has ever found a bank that will lend money on anything without belt and braces security, he has found something that I have not. Nevertheless, we have had co-operation from the banks. The discussions are taking place, and we are confident that success will be achieved.

§ Mr. Rost
May we have an assurance that the project, and particularly the sale of the gas, will not be dominated by BNOC and British Gas, but that it will offer a genuine opportunity for competition with those monopolies?

§ Mr. Gray
I can give my hon. Friend that assurance. BNOC and British Gas have been appointed by the Government as wholesalers. There is no reason why negotiations between producers and purchasers cannot continue as long as they go through the wholesale channel. We believe that this will increase the speed of the project.

§ Mr. Gordon Wilson
Although I accept the Minister's assertion that the technical arrangements are making progress, does he not realise that with every month that passes his statements about Government hopes of achieving the deadline are becoming less and less convincing, particularly in view of the difficulties over financing? Is he not now in danger of losing the initiative over the whole project? When does he hope the financing arrangements will be completed?

§ Mr. Gray
A project of this magnitude must take time to negotiate. We cannot expect companies to invest the substantial amount of money that will be necessary without their ensuring that the return is available to them at the end. We are confident that this will be achieved, but I cannot immediately give the hon. Gentleman a date. I can say "as soon as possible".

§ Mr. Eadie
The hon. Gentleman must be aware that accusations are being made that on the Government's side expedition of decision-making is not the name of the game. My right hon. Friend the Member for Leeds, South (Mr. Rees) wrote to the Secretary of State inquiring about this matter. I quote a section of the letter that the Minister's right hon. Friend—

§ Mr. Speaker
Order. The hon. Gentleman cannot quote in asking a question from the Opposition Benches; quotations may be made only in answers from the Government Front Bench.

§ Mr. Eadie
I do not propose to quote from the Opposition, Mr. Speaker. I propose to quote what the right hon. Gentleman said.

§ Mr. Speaker
I am sorry. The hon. Gentleman cannot do that—unless he does it in such a way that we do not realise that he is quoting the right hon. Gentleman.

§ Mr. Eadie
It was reported that the right hon. Gentleman said that the private sector had not yet been given the chance to demonstrate its position. In that case, why on earth has the Prime Minister intervened?

§ Mr. Gray
The hon. Gentleman is not clear about the facts. The private sector is only too anxious to take part in the venture, but, unlike some Government bodies in the days when the hon. Gentleman's party was in office, it is determined that anything that it invests money in will be profitable at the end of the day.

§ Mr. Eggar
Is not the key matter that the gas-gathering pipeline shall proceed, whatever the difficulties with the financing? Is not one way out of the present difficulty that the Government take the same approach as was used for the guarantee given to ICL, when we were told that that guarantee did not form part of the PSBR?

§ Mr. Gray
The question of guarantees and so on has been raised from time to time, but these are still matters of discussion between the companies concerned and the organising group.

§ Mr. John H. Osborn
The Norwegian Parliament is this week considering a proposal from Statoil and others for another gas-gathering pipeline. Is the offer still open to the Norwegians? What is the Norwegian impact on the situation?

§ Mr. Gray
The British Gas Corporation has made clear to the Norwegians that the part of its offer which related to our acceptance of gas from the Norwegian section of Statfjord in the early years is still available. In other words, if the Norwegians prefer to accept the European offer, which they have received, but our pipeline, as we expect, is completed before theirs, we are prepared to take gas from them for a limited period. That offer remains open.