North Sea Oil (Hansard, 28 June 1982)

§ 3. Mr. Douglas
asked the Secretary of State for Energy what are the current prices charged for North Sea oil.

§ The Secretary of State for Energy (Mr. Nigel Lawson)
BNOC's current price for Forties crude is $33.50 a barrel. The prices for other grades traded by BNOC vary around that price according to quality.

§ Mr. Douglas
As this price will affect the potential value of Britoil, when does the Secretary of State intend that this particularly obnoxious privatisation is to be brought forward? Does he intend to ensure that the House has ample opportunity to debate the prospectus before it goes to the market?

§ Mr. Lawson
That was a rather tortuous way into the hon. Gentleman's supplementary question. He is well aware that the price of North Sea oil is determined by the response to market forces and has nothing to do with the forthcoming flotation of Britoil, which, I hope, will occur before the end of this year. It is open to the Opposition to make use of a Supply day if they wish to debate this question further. I would think that the House in general and the hon. Gentleman in particular have had ample time to debate these important matters during the passage of the Oil and Gas (Enterprise) Bill, which I am glad to say is due to receive Royal Assent today.

§ Mr. Ioan Evans
Will the Secretary of State examine the circumstances in which the price of petrol has increased under this Government from less than 70p a gallon to i1.70? Is he aware that North Sea oil forms only one part of the question? Will he review the whole issue of petrol price increases that have taken place under this Government?

§ Mr. Skeet
There is a later question on the subject.

§ Mr. Evans
Have not the Government contributed to that increase through taxation measures in the Budget?

§ Mr. Lawson
As my hon. Friend the Member for Bedford (Mr. Skeet) muttered, improperly, but quite accurately, from a sedentary position, there is a subsequent question on the Order Paper dealing with this matter. I am sure, however, that the hon. Gentleman will be aware that the price of petrol in real terms is lower today than it was in 1975.

§ Dr. J. Dickson Mabon
Did not the Secretary of State agree that, at some stage in our proceedings and before the market flotation, we should debate the prospectus and the heads of agreement of the participation agreement between BNOC and Britoil? Will he confirm that he intends to advise the Leader of the House that such a procedure would be desirable if he intends to act before the end of the year?

§ Mr. Lawson
The heads of agreement of the participation agreement between Britoil and BNOC will be placed in the Library and will therefore be available to all hon. Members. Similarly, the prospectus will be published at the normal time before the flotation and will be available to all hon. Members. The debates that take place on the Floor of the House are partly a matter for the Opposition, who may wish to choose this subject for a Supply day debate. I should be happy to participate in such a debate. Ultimately, this is a matter for my right hon. Friend the Leader of the House.

§ 4. Mr. Michael Morris
asked the Secretary of State for Energy when he expects to invite cash tender bids for North Sea blocks in the eighth licensing round.

§ Mr. Lawson
I expect to issue the formal invitation to apply for all eighth round blocks, including those to be offered for cash tender bids, in September.

§ Mr. Morris
I welcome that news. However, will the Oil and Gas (Enterprise) Bill, which we assume will have passed into law by then, mean that those who are bidding will be in a better position to bid for gas contracts and will therefore be able to bring gas ashore with a greater prospect of profits than they were able to expect in the past?

§ Mr. Lawson
My hon. Friend is right. The Bill will receive the Royal Assent and become an Act before questions are finished today. As for the eighth round, my hon. Friend is also right. That is why between 30 and 40 blocks in the mature southern gas basin will be on offer in the eighth round.

§ Mr. Rowlands
Will not these choice blocks go to the highest bidders, who will be the large multinationals? Will not the scheme therefore discriminate against smaller independent private British companies, over which the right hon. Gentleman cried so many crocodile tears in the seventh round?
Will the right hon. Gentleman clarify another aspect of the highest-bidder system? Will he stick strictly to that rule? Will the blocks go to the highest bidders or will other discretionary aspects be involved—the performance or reputation of the companies, for example? Above all, will he make sure that any such tender system will be public and above board, so that we may all judge it?

§ Mr. Lawson
May I correct a statement that 1 made a little earlier, Mr. Speaker? I am informed that the Royal Assent to the Oil and Gas (Enterprise) Bill was signified a few minutes ago in the other place. [HON. MEMBERS: "Hear, hear".]

§ Mr. Speaker
Order. The Bill has not been signified here yet.

§ Mr. Lawson
Mr. Speaker, this is one of those happy occasions, of which there are many, on which both you and I are correct.
The majority of the blocks will not be subject to the tender procedure. They will be allocated on a discretionary basis, which I know the hon. Gentleman prefers. That includes all the 30 to 40 gas blocks to which I referred a moment ago. About 15 blocks in the mature oil province will be open to the highest bid. The intention is that they will go to the highest bid, except where certain minimum requirements in relation to technical competence or financial capability could render such an award imprudent.

§ Mr. Viggers
The House knows my declarable interest in this subject. Is my right hon. Friend aware that the hon. Member for Merthyr Tydfil (Mr. Rowlands) is correct. in that the tender system may be attractive to the Treasury and the larger oil companies, but it is a major disincentive and disadvantage to the smaller British companies, which the Conservative Party is seeking to support?

§ Mr. Lawson
I respect the views of my hon. Friend, who is a member of the board of a small British oil company and has a great deal of knowledge in this matter. Nevertheless, it is the Government's judgment that to offer 597 15 of the total of about 85 blocks for auction is the right balance, bearing in mind the conflicting considerations on both sides.

§ Mr. Hoyle
What part will the national interest play in this regard? It cannot be in the national interest for multinationals to have the cream, but it appears from the right hon. Gentleman's answers that that will happen under the procedure that he is outlining.

§ Mr. Lawson
We are talking of 15 blocks out of a total of about 85 on offer. There is no reason to suppose that foreign companies will outbid British companies for the 15. We shall have to wait to see who puts in the highest bid. Despite the hon. Gentleman's sneer at multinational oil companies, they have played a constructive role in the development of the North Sea oil industry, to the benefit of the whole nation.