HL Deb 22 June 1981 vol 421 cc848-50

2.41 p.m.

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 how many exploration wells have been drilled, or are proposed to be drilled, on the United Kingdom continental shelf in 1981.

The Minister of State, Department of Employment (The Earl of Gowrie)

My Lords, fifteen exploration wells had been commenced by 31st May. It is difficult to forecast the total number of exploration wells which will be drilled during 1981 since licensees only have to give 28 days' notice of their intention to drill.

The Earl of Lauderdale

My Lords, in thanking my noble friend for that reply, I should like to ask whether he considers that it is a very satisfactory figure for the first five months of the year, bearing in mind that already two years ago the United Kingdom Offshore Operators' Association argued that there should be a target of 90 exploration wells a year and their arguments have not yet been refuted?

The Earl of Gowrie

My Lords, I do not think that any Minister is ever entirely satisfied with anything. Nevertheless, it seems to us that good progress has been made in the Seventh Round: 79 awards have already been made, which include substantial commitments for carrying out real work under the licences.

Lord Strabolgi

My Lords, are the Government aware that the new supplementary petroleum tax is a positive disincentive to further exploration? Will they enter into discussions with the oil industry over this matter, as several companies are saying that the prospects of return are not commensurate with the investment involved?

The Earl of Gowrie

My Lords, it is certainly true that all of us would like all taxation to be lower and that certain companies have said that they are reviewing their exploration plans in the light of changes to the régime. Nevertheless, we have no evidence at all as yet that there is any diminution in interest in applications for licences.

The Earl of Lauderdale

My Lords, will my noble friend not recognise that the sentiments just expressed by the noble Lord, Lord Strabolgi, opposite were, of course, expressed by our party when we were in Opposition? Will he not further recognise that there is some merit in the ancient fable about the goose and the golden egg, and that as the success ratio inevitably declines on the continental shelf, therefore the tax take and the tax menace ought to decline as well if we really want exploration to proceed?

The Earl of Gowrie

My Lords, I have long attended to nursery rhymes as a fountain of wisdom but, in fact, as I said to the noble Lord, Lord Strabolgi, we have no evidence that there is any lessening of interest in exploration and the changes will, of course, yield an extra £1,000 million in 1981–82. By our efforts to contain public spending, I would hope that further taxes would not be necessary. However, this is a difficult struggle as my noble friend is aware.

The Earl of Lauderdale

My Lords, my noble friend says that there is no evidence. Will he read the papers, the petroleum press and talk to the industry and find out, because really that answer was a surprising one?

The Earl of Gowrie

My Lords, the Government are in constant discussion with the industry. Of course the industry is not happy at additional taxes—none of us is in personal or corporate capacities—and the Government regret the situation which led to their being levied. Nevertheless, I rest on my answer that the progress of the Seventh Round gives us no indication that there is any diminution of interest.

Lord Leatherland

My Lords, can the noble Earl tell us whether it is a fact that home-produced oil is more expensive than that which we buy on the world market?

The Earl of Gowrie

My Lords, it is a geological fact that the quality of North Sea oil is very high, so we are dealing with that which is extremely expensive in terms of its quality. Ever since the North Sea was developed we have exported North Sea oil at a high price in order to buy lower grades of oil at a lower price.