§ The Earl of LAUDERDALEMy Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
§ The Question was as follows:
§ To ask Her Majesty's Government when they propose to offer further licences for exploration for hydrocarbons in the British sector of the Continental Shelf.
§ The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of INDUSTRY (Lord Melchett)My Lords, arrangements proposed by the Government for the Fifth Round were set out in a Consultative Document published on 27th May. As a result of the ensuing consultation with interested parties, my right honourable friend the Secretary of State for Energy plans to invite applications soon, and to begin granting licences at around the end of the year.
§ The Earl of LAUDERDALEMy Lords, in thanking the noble Lord for that reply, may I ask him whether the Government have been able to modify the blackmailing position set out in the Document to which he referred, and whether they have come any nearer to the views of the industry with regard to public sector participation?
§ Lord MELCHETTMy Lords, as the noble Earl knows, we believe that the proposals represent a fair reward to oil companies and a fair return to the State, and I do not believe that the consultations, useful as they have been, will make us alter that view.
§ The Earl of LAUDERDALEMy Lords, could the noble Lord say whether 506 all the Offshore Operators' Association members have accepted the principles set out in the Document?
§ Lord MELCHETTMy Lords, my right honourable friend will soon no doubt be announcing the results of consultation; but, as the consultations are at the moment continuing, I do not think the noble Earl would expect me to make a statement about them.
§ The Earl of LAUDERDALEMy Lords, would the noble Lord bear in mind that the Third Round, which required public participation as a ground for preference in dealing with licensing applications, was indeed the greatest flop?
§ Lord MELCHETTMy Lords, I am sure that the experience of that Round has been borne in mind in the arrangements for this Round, which I do not believe will be a flop.
Lord PAGET of NORTHAMPTONMy Lords, is the noble Lord aware that the Government are much to be congratulated on having recovered from the oil companies most of the swag which was presented to them by the Conservative Party?
§ Lord MELCHETTMy Lords, I am grateful for the noble Lord's usual kind and considerate view of the Government's policy.
Lord CAMPBELL of CROYMy Lords, is it the intention of the Government, as appears to be indicated in the Consultative Document, that companies who agree to a 51 per cent. participation will get priority over other companies?
§ Lord MELCHETTMy Lords, the full participation agreements will, of course, take some time to work out, as the noble Lord will appreciate; but it would be difficult for the Government to award licences to any company with an interest in an existing oilfield which was not in serious discussion with the Government about participation. However, I think it is true to say that almost all, if not all, of the companies are in serious discussion with the Government about participation.
§ The Earl of LAUDERDALEMy Lords, could the noble Lord help us in this further way? Would he agree that one of the difficulties confronting the Government at the present time is a slump in investment confidence in the offshore, and that that in turn is due to the Government's behaviour in going back on the ground rules affecting previous licences and their penal taxation exactions?
§ Lord MELCHETTNo, my Lords; I would not agree with what the noble Earl says, and I suggest that it might be wise to wait until we see how the oil companies respond to this Fifth Round of licences before we make such sweeping generalisations about the position.
§ Lord SLATERMy Lords, is the noble Lord aware that it would be very wise for this House and the other place to take particular note of what my noble friend has said in the course of his replies to the five questions asked about this matter by the noble Earl, Lord Lauderdale? In the course of the noble Earl's questions to my noble friend, I hope my noble friend took particular note of one word the noble Earl used; that is, when he talked about "blackmail". In the course of consultations, surely to goodness we do not enter such an avenue when we seek to discuss and arrive at an agreement with these people.
§ Lord MELCHETTMy Lords, as my noble friend knows, there are occasions when the noble Earl uses language which I think it is wise to take with a pinch of salt.