HL Deb 06 July 1981 vol 422 cc453-4
The Earl of Lauderdale

My 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 on what assumptions current depletion policy on the United Kingdom continental shelf is based.

Lord Skelmersdale

My Lords, the main assumptions are that there could be a significant surplus of United Kingdom oil production over United Kingdom consumption in the 1980s; that we shall become net oil importers again in the early 1990s; and that the real price of crude oil will continue to rise over the longer term. But there are many uncertainties in all this. That is why the depletion policy which the Secretary of State for Energy announced last July is a flexible one, with decisions being taken on a case-by-case basis as they arise.

The Earl of Lauderdale

My Lords, in thanking my noble friend for that instructive and comprehensive reply, may I ask him whether he accepts that the policy is based, as he said, on the belief that oil prices may rise considerably in real terms over the coming years, and does that not seem to contradict current experience, which is that there is a glut, that there is a depression and that it may be a long while before oil prices really rise significantly again? Would he perhaps take that point back to the department?

Lord Skelmersdale

My Lords, I will certainly take that point back to the department, but I should say that we are in a totally market situation in this particular case. However, the Government's oil demand estimate, as I am sure my noble friend will know, is that future oil demand will, of course, depend on many factors, including the rate of economic growth, developments in oil prices and the prices of competing fuels. Of course, the uncertainties associated with these factors are considerable. For this reason, it would be unwise to adopt any single view about future oil demand over a certain time period relevant to depletion policy considerations.

Lord Balogh

My Lords, does the noble Lord the Minister realise that the proposed break-up of BNOC would make conservation difficult and costlier?

Lord Skelmersdale

My Lords, there are many things which will make depletion policy and conservation difficult, but I do not think that is one of them.

The Earl of Lauderdale

My Lords, would my noble friend take one other point on board for the department; namely, that if there has to be a cutback in production in the coming years it might well come from that part which is reserved for the British Government's royalty of 12½ per cent. and might also come from the production of the state oil company, BNOC? Perhaps he would ask the department to consider that.

Lord Skelmersdale

My Lords, again, my right honourable friend and the department will, of course, consider that point.

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