§ 7. Mr. Elfyn Llwyd (Meirionnydd Nant Conwy)(PC)What the status is of the application for Export Credits Guarantee Department support from the Sakhalin II phase 2.oil and gas project. [156258]
§ The Minister for Trade and Investment (Mr. Mike O'Brien)In October 2002, we received an application for cover for the Sakhalin II project. No decision on ECGD cover has yet been taken, pending a full assessment.
§ Mr. LlwydI am grateful to the Minister for that response. Is he aware of the study by Richard A. Fineberg Research Associates on the seismic risk associated with the onshore portion of the phase 2.pipeline? That study found that the Sakhalin Energy Investment Company, led by the Royal Dutch/Shell Group, has underestimated the number of active fault lines that the buried pipeline will have to cross. Apparently, it has also underestimated the increased risk of the pipeline rupturing—a risk associated with its being buried, rather than elevated above the fault, as was the case with the trans-Alaska pipeline system. What account will the Minister take of the potential impact on the critically endangered western grey whale of constructing offshore production platforms?
§ Mr. O'BrienThe issues that the hon. Gentleman raises are very serious and they will form part of the overall environmental assessment that has to be made. We will have to look not only at any seismic implications of the project, but at the impact on fisheries, the social impact, and the implications in terms of oil spills and human rights. Importantly, as he said, the western grey whale is a critically endangered species. It is believed that only 100 remain and I have personally written to the chief executive of the project expressing my concern. Before I approve any support for the project, however, 407 I will need to be confident that, among other things, the best scientific advice is available not only on the seismic and other environmental issues, but on the whales.
§ Dr. Vincent Cable (Twickenham) (LD)When my former colleagues in the oil industry and others approach the Minister for help, why cannot they be told that it is possible to buy private political risk insurance and medium-term credit in the market? Why does the taxpayer have to underwrite it?
§ Mr. O'BrienIf the hon. Gentleman talked to business interests in Britain, which I urge him to do—he clearly does not do so enough—he would find that they regard the support from the Export Credits Guarantee Department as absolutely vital to the future success of British industry, particularly our high-tech industry. The way in which the hon. Gentleman and his Liberal Democrat colleagues intend to destroy, as it appears, ECGD support for British industry is something that our industry must be deeply concerned about.
§ Mr. James Arbuthnot (North-East Hampshire) (Con)I am delighted to say that I entirely agree with what the Minister has just said. The Export Credits Guarantee Department used to be the best in the world, but does the Minister accept that Department's own judgment last year that it provides generally less cover than other export credit agencies and at generally greater cost than other such agencies in the world? Is that good for British business?
§ Mr. O'BrienThe hon. Gentleman might like to consider the reason why ECGD is having more difficulties than some other export credit guarantee departments. Could it be attributable to the fact that, in 1993, the Conservative Government decided to privatise the most profitable area of ECGD, so the cross-subsidisation that takes place in other export credit agencies across the world cannot take place in the UK? That has damaged British industry in the long term, and we believe that we are now putting in place the best possible means of ensuring support for British industry. That is what we intend to do.