Oil/Gas Exploration (Hansard, 2 December 2003)

§ 2. Sir Robert Smith (West Aberdeenshire and Kincardine) (LD
): What discussions he has had with the 352 Foreign Office about the impact of the draft European constitution on investment in oil and gas exploration jobs in Scotland. [140744]

§ 4. Angus Robertson (Moray) (SNP)
What discussions he has held with the Foreign Secretary on the energy provisions of the draft constitutional treaty of the EU. [140746]

§ The Secretary of State for Scotland (Mr. Alistair Darling)
I have met representatives of the oil industry, and we have made it clear that we will not agree to any proposal that is inconsistent with the United Kingdom's energy interests.

§ Sir Robert Smith
I thank the Secretary of State for that answer, which is helpful in so far as it goes. I must declare an interest related to oil and gas exploration that is registered in the Register of Members' Interests. Last night, at the sitting of the Standing Committee on the Intergovernmental Conference, the Foreign Secretary said that nothing is agreed until everything is agreed and that, therefore, we will never know what the outcome will be until the final draft constitution comes out of the IGC process. Does the Secretary of State recognise that if the energy chapter remains unamended, it will put uncertainty into the minds of investors, damaging vital investment in the exploration and production of North sea oil and gas, which provides so many jobs in Scotland?

§ Mr. Darling
I do recognise that, and I was in Aberdeen last week and met representatives of the oil industry. I am in no doubt about the importance of North sea oil not just to Scotland, but to the whole of the United Kingdom, but the proposals as drafted are not acceptable to the Government. We have made it clear that we are extremely concerned about the proposals on taxation, which we regard as a matter for member states' national Governments. We are also concerned about the proposal in relation to the extraction of oil from the North sea, as well as powers in times of emergency. Those matters are of great importance, which is why we are pressing them—the Prime Minister made that very clear in the House a couple of weeks ago—and we shall continue to do so. As for the outcome, the Foreign Secretary was simply pointing out the obvious to the hon. Gentleman: the conclusions are reached at the end of the day, not now. We have not yet reached the conclusions. We are continuing to press the matter.

§ Angus Robertson
Yesterday, at a sitting of the Standing Committee on the IGC, Foreign Office Ministers refused to confirm the text of the amendment on the controversial energy chapter; less than half an hour ago, the Minister for Energy, E-Commerce and Postal Services did so at a sitting of the European Scrutiny Committee. The amendment shows that the UK Government are not seeking to retain the power over treaty negotiations and boundary issues, and that they did not even include the text about important fiscal measures. Will the Secretary of State confirm what that text states and what the Government intend to do on 353 boundary and treaty negotiation issues? When will they pull their finger out and pull their weight on this important subject?

§ Mr. Darling
As I told the House a few moments ago, the Government are very concerned about the text that the Commission has proposed. We are holding discussions with other member states. The matter was discussed with Foreign Ministers at the weekend, and we are currently discussing with other member states a redrafting of the text to meet the United Kingdom's concerns. The issue is of great importance, which is why we will continue to press it.

§ Mr. Frank Doran (Aberdeen, Central) (Lab)
I welcome my right hon. Friend's statement and the commitments that other Ministers, including the Prime Minister, have given. The North sea oil and gas industry is extremely important not just to the north-east of Scotland and East Anglia, but to the whole country. I know from the Secretary of State's visit to Aberdeen last week, which was very welcome, that he will be seized of that fact, but ending the uncertainty is important to the oil industry. This is the time of year when investment in the North sea for next year—the period following April—is negotiated, and not always with the London or UK offices that are fully seized of the issue, but with the Houston and Dallas offices, so is it not important that the uncertainty should end as soon as possible?

§ Mr. Darling
My hon. Friend, who knows a great deal about the North sea and the taxation regime there, is quite right. The matter is of immense importance not just to the north-east of Scotland and East Anglia, but to the whole country. That is why we attach considerable importance to making sure that the United Kingdom's interests are safeguarded.
The point that my hon. Friend makes about certainty in the North sea oil regime is equally important, and I am well aware of the fact that companies prize knowing where they stand more than just about anything else. That is why the Government have gone to considerable lengths over the years to ensure that we consult and talk to the industry and try to take it with us. As I told the House a few moments ago, we are continuing to press the matter because it is of great importance to all of us.

§ Mr. Michael Connarty (Falkirk, East) (Lab)
May I take a different view from the hon. Member for Moray (Angus Robertson) and congratulate the Government on the very hard work that they have been doing over the past month to insert amendments into the clauses of the new constitution? I stress that the biggest advantage for Scotland is probably its nearness to the Norwegian fields, and the vital ability of our Government to sign a deal with another nation will be under threat if we do not have specifically in the constitution—it is not in the amendments that we saw today at the European Scrutiny Committee—provision for the right of a sovereign Government to sign a treaty with another nation without the EU keeping that competence to itself.

§ Mr. Darling
My understanding is that, notwithstanding what is being offered by way of a draft, it is within our competence to sign treaties with 354 countries such as Norway. My hon. Friend is right to draw attention to the importance of that. Because of the negotiations that took place between this country and Norway, we were able to secure gas supplies that will ensure the continuation of work at St. Fergus and Mossmorran.
I return to the point that discussions are still continuing; they were not concluded at the weekend. The Government have made it absolutely clear that we attach considerable importance to getting this right and we intend to continue to do that right up until the constitution is eventually agreed, whenever that may be.

§ Mrs. Jacqui Lait (Beckenham) (Con)
As the Secretary of State has indicated how important this issue is to the north-east, is it not right that oil and gas workers should have a referendum on the new draft constitution whenever it comes out of the mangle?

§ Mr. Darling
As I said to the House and as the hon. Lady suggests, the matter is of great importance to the north-east of Scotland, but it is also of great importance to people living in Beckenham. The whole of the United Kingdom benefits from the industry. As for a referendum, the Government have made their position clear time and time again, and I am in complete agreement with everything that has been said on that.

§ Mrs. Helen Liddell (Airdrie and Shotts) (Lab)
May I thank my right hon. Friend for his recognition of the seriousness of these matters? Security of supply issues are very important in relation to oil and gas, and to energy in general. The European Union has long had ambitions to extend competence into energy matters, so can he reassure me that he will take the message from the House that there is grave concern about the energy chapter, and will he echo the remarks of the Prime Minister that he will resist it at every opportunity?

§ Mr. Darling
My right hon. Friend is absolutely right. This appears to be an example of the Commission trying to go further than we believe it should. We believe that it is very important in matters of taxation and our ability to regulate, and extract, the supply of oil from the North sea that we retain the competence and right to do so as a member state. That is very important to us. As Members have said, this issue is not just about the United Kingdom's short and medium-term interests. If we want to ensure that we continue to extract the considerable supplies that are still in the North sea, we must have a stable regime—stable in taxation and stable in regulation so as to ensure that investment stays in place. As I have said, we believe strongly in that and will continue to press the point in the discussions that are continuing.

§ Malcolm Bruce (Gordon) (LD)
Given that there is more oil and gas to be extracted from the North sea than has yet been produced, does the Secretary of State recognise that it would be utterly unacceptable for the United Kingdom to give up its sovereign right to control the depletion policy and licensing? Although he has said that it is not over until it is over, the fact remains that any suggestion that that right would be given up means 355 that the draft constitution would not be a tidying-up exercise, but would involve the total surrender of sovereignty in a crucial area.

§ Mr. Darling
With the possible exception of the SNP, which almost gives the impression that it has a vested interest in hoping that the discussions do not succeed, the rest of us completely agree about the importance of oil and of getting the provisions absolutely right. I do not think that I should detain the House further by repeating what I have said. The matter is important; that is why we are continuing to press it.