BNOC: Legislation (Hansard, 27 January 1982)

§ Lord Orr-Ewing
My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

§ Lord Skelmersdale
My Lords, this Bill gives powers to introduce private capital into the oil-producing business of BNOC. It enables the corporation to establish a subsidiary, to be named Britoil, and to transfer all its oil-producing business to it if the Secretary of State approves. Subject to the progress of the Bill through Parliament, the Government hope to establish Britoil as an operating concern in the autumn. Initially 51 per cent. of the shares will be offered for sale as soon as market conditions allow, which we hope will be before the end of the year. BNOC itself will continue in being, trading primarily in participation oil. Your Lordships will be aware that the Bill received its Second Reading in another place last week. Due to the great interest of your Lordships in this subject, I have, unusually, seen that notes on clauses are already available in the Printed Paper Office.

§ Lord Orr-Ewing
My Lords, while thanking my noble friend for that reply, may I ask whether he is aware that the Government will have the support of the majority of taxpayers and electors in this country for making the public sector somewhat smaller and the private sector somewhat larger as a result of this 952 measure? Is it not a great advantage of these proposals that Britoil will not henceforward come under the restrictions of the public sector borrowing requirement and therefore may be able to advance its progress—with exploration, in development and in the production of North Sea oil—rather more quickly?

§ Lord Skelmersdale
My Lords, I very much agree with my noble friend in the first part of that supplementary question. While in the public sector BNOC's financial requirements, which will not always remain within the size of its internally generated resources, must compete with other claims on the public purse, thus stunting the spirit of enterprise, privatisation will allow Britoil to finance its operations free of the public sector.

§ Lord Strabolgi
My Lords, would the noble Lord not agree that BNOC has a very fine record and is it not important that Britain should retain some stake in the North Sea?

§ Lord Skelmersdale
I would agree that BNOC has a very fine record, my Lords, but I would not agree that there is any necessity at all for the public sector in Britain to be concerned with the vast capital requirements of North Sea Oil operations. I should point out to the House that of the total North Sea operation only 7 per cent. is in BNOC's hands.

§ Lord Davies of Leek
My Lords, is the Minister aware that he has given one reason that is often given for selling off assets that belong to British taxpayers, whatever one's politics may be? As we are here dealing with something which is of paramount importance to all the British people—to our security, strategy and everything else—may I ask the noble Lord whether the Government have studied in depth what the realities are of shedding this real asset that the British people possess?

§ Lord Skelmersdale
Yes, of course, my Lords, the Government have studied this in depth, and we have come to the conclusion that we do not agree with many of the remarks that the noble Lord has just made. As I said earlier, BNOC is responsible for only 7 per cent. of current North Sea production, with over 90 per cent. of the remainder efficiently in the hands of the private sector. Our oil and gas resources—which I think is the point that the noble Lord is getting at—are vested in the nation by virtue of the Petroleum Production Act 1934 and the Continental Shelf Act 1964. Oil companies, whether in the public or the private sector, act as licensees of Government in developing these resources. There is no loss of a national asset, and I shall not he accused of the rape of Britain.

§ Lord Gisborough
My Lords, will the noble Lord ensure that, as with British Aerospace, enough shares will be made available for purchase by the employees and that they will be encouraged to buy shares in their own firm?

§ Lord Skelmersdale
My Lords, I am very grateful to my noble friend. Naturally, we shall keep very 953 firmly in mind the interests of the employees of Britoil, but it is too early to say what will be the result of current discussions on this subject.

§ Lord Molloy
My Lords, would not the noble Lord agree that BNOC not only has a future in regard to the British economy, but perhaps even more vitally, particularly in these dangerous days in which we live, it has a role, and can have an increasing role, à propos the defence of our nation in relation to the three armed services? Therefore is it not vital that British oil should remain in British hands?

§ Lord Skelmersdale
My Lords, through the participation agreements, up to 51 per cent. will continue to be offered for sale to BNOC, and I think that this is the defensive role that the Government ought rightly to require BNOC to play.

§ Lord Blyton
My Lords, is the Minister aware that many members of the general public view as obnoxious the selling off of the assets of nationalised industries to private enterprise, while leaving the uneconomic sections of nationalised industries to be carried by the taxpayer? That is real robbery, my Lords.

§ Lord Skelmersdale
My Lords, I cannot see the purchase and sale of assets by a private individual or a nation as being at all improper. The nation raised the capital to put into the nationalised industries. Why on earth, when the circumstances are right, should it not free this capital for other uses?

§ Lord Mackie of Benshie
My Lords, can the Minister say whether there will be any restriction on foreigners buying the 51 per cent. of the shares?

§ Lord Skelmersdale
Yes, my Lords; naturally we do not want any single company to gain control of Britoil. A scheme is currently being worked out through the articles of association, and this will be presented to Parliament when it has been worked out. I would hope that this will take place during the passage of the Bill through one or other of the two Houses.

§ Lord Strabolgi
My Lords, will the Government still be able to maintain control of our depletion policy?

§ Lord Skelmersdale
Yes, my Lords, certainly. We have a depletion policy which affects equally the private sector and the public sector. It is going to make not one scrap of difference.