HL Deb 31 July 1985 vol 467 cc305-26

The Agency's rights to crude oil and natural gas liquids The Agency's Entitlement

1. In respect of each Commercial Oil Field (COF) the Agency shall, in each election period, be entitled to such proportions as expressed as a percentage not to exceed 51 per cent. of crude oil and natural gas liquids (NGLS) after taking into account the quantity of any crude oil and natural gas liquids required to be delivered during such election periods to the Secretary of State as royalty in kind.

Election notice for crude oil

2. An election notice, given by the Agency in respect of crude oil shall be served on seller and on the operator not less than 30 days before the commencement of the election period to which the election notice relates.

Exercise of the Agency's rights to natural gas liquids

3. An election notice given by the Agency in respect of any stream, namely—

  1. (a) a stream of ethane
  2. (b) a stream of propane
  3. (c) a stream of butane
  4. (d) a stream of crude oil
  5. (e) a stream of methane
  6. (f) a mixed stream, being a stream of other than the entire unseparated natural NGLS stream combining in mixed form two or more substances which together constitute the entire unseparated NGLS streams

shall be served on seller and operator not less than 6 months before the commencement of the election period to which the election notice relates.

Lifting Arrangements

4. The seller shall use its best endeavours to procure that the arrangements and agreements relating to the offtake, lifting and transportation of petroleum from or attributable to an interest in any COF (including the lifting by or delivery to the Agency and including (without limitation) any pipeline or terminal agreement for the use of any facilities up or at any actual or prospective point of delivery or point of unloading) shall be negotiated and agreed between the seller, the Agency and any other relevant parties in the case of COFs not in commercial production as at the date hereof, before the relevant date of commencement of commercial production and in the case of COFs which are in commercial production as at the date hereof, as soon as practicable. Such arrangements and agreements shall be fair and reasonable to the Agency, the seller and other licensees and shall be compatible with the operational requirements of any relevant operating agreement or amended operating agreement. To the extent that the consent of third parties is required in order to implement the provisions of such arrangements and agreements, the seller shall use its best endeavours to obtain such consent. Where such arrangements or agreements are to be concluded between seller and the Agency alone, the seller and the Agency shall negotiate in good faith in order to conclude such arrangements or agreements. In the case of COF not in commercial production as at the date hereof, the seller shall not agree to such arrangements or agreements unless the Agency agrees to the same. If there is more than one delivery system and each licensee may determine the proportion of petroleum attributable to its participating interest which may be taken via each such delivery system then the Agency shall have a like right in respect of petroleum to which it is entitled by virtue of an election notice. The seller shall use its best endeavours to ensure that such arrangements or agreements shall provide for the Agency to have the right to aggregate the petroleum which the Agency is entitled to lift pursuant to these arrangements with any petroleum to which it may otherwise become entitled and shall ensure recognition by the relevant third parties that petroleum in respect of which the Agency serves an election notice hereunder shall be treated in the same manner as all petroleum from, or attributable to, the COF governed by such arrangements or agreements.

Access to Information

5.—(1) The Agency shall have full access to all information relating to the COF in the same manner as each of the other parties, or, if relevant, sole risk parties, to the relevant operating agreement, amending operating agreement, offtake, lifting, terminal or pipeline arrangements or agreement applicable to that COF.

(2) The Agency shall have the right at all meetings, whether of Operating Committees, other sub-committees or otherwise, established under or pursuant to the relevant operating agreement, amended operating agreement and offtake, lifting, terminal and pipeline arrangements or agreements applicable to that COF.

(3) Without prejudice to the generality of the above such information shall include all such production profils, such data relating to actual and estimated production, estimated reserves, quantities, qualities, anticipated delays or interruptions in production, storage, and transport systems, timing and dates of lifting and delivery and of tanker movements, and such Agency papers and other documents applicable to meetings of the relevant operating committee, and any sub-committees thereof").

Lord Lloyd of Kilgerran

It would save time if we adopted that course.

Lord Stoddart of Swindon

Therefore I shall speak to my Amendment No. 24 and to Amendment No. 34 which constitutes a new schedule. Amendment No. 24 paves the way for the relevant schedule on participation agreements. The purpose of the amendment is to ensure that we have good participation agreements which can be activated when necessary. Participation agreements have developed, as noble Lords know, in an ad hoc manner, and the amendment attempts to create a model agreement. I hope it will be the sort of model agreement which will be acceptable to the noble Lord, Lord Lloyd, who has spoken about such agreements.

First, it is beneficial to have consistent agreements. Indeed, in the past when interest in a licence has been transferred to a new owner the rights of the corporation have not been affected. As I have said, Amendment No. 24 paves the way for Amendment No. 34 and one of the prime provisions is that the schedule requires a period of 30 days before the commencement of the election period to which an election notice applies. This gives the agency the opportunity to trigger participation agreements faster than at present. In my view it is absurd of the Government to claim, as they have, that the present position (where it takes 6 or 12 months to activate an agreement) is satisfactory in times of crisis. As I said on Second Reading, a crisis would have come and gone while the Minister was fiddling with the activation of participation agreements. That simply is not satisfactory.

We also seek in the new schedule to add methane to the LPG rights. We have done so because most participation agreements covering LPG include special arrangements because British Gas was the sole purchaser. But, as noble Lords know, it is the intention of the Government to privatise the British Gas Corporation. A Bill is to come forward in the next Session of Parliament, I understand. The question is whether we should allow an arrangement between two state corporations to continue unamended so as to give the privatised gas industry special privileges. Surely we should not and the agency should have the right to serve a notice on everyone, and that includes privatised gas.

Paragraph 4 of the schedule sets out the arrangements that will have to be in place for proper and effective activation in times of crisis for lifting arrangements and to ensure that the agency is not obstructed in its task. I am sure the noble Lord will agree with that sentiment and will want to facilitate it. Finally, in paragraph 5 of the schedule provision is made for the agency to have full access to information to enable it to carry out its role. It also lays down that agency representatives should have the right to participate fully in meetings to safeguard the agency's and the nation's interest in every regard.

Frankly, I cannot see how the noble Lord can take exception to these amendments. After all, I can remind him that it was he who in another place in 1982 defended participation agreements night after night—long, grinding night after long, grinding night. Indeed, it was he who then said that participation agreements constituted the best safeguard for security of supply. That was when the Government were setting up Enterprise Oil, but in fact they were taking away exploration and production from BNOC. It was the noble Lord himself, he will remember (because it must have been a very difficult period for him; it was a hard-fought Bill) and will confirm to the Committee, I am sure, who in 1982 defended the participation agreements, and did it so effectively. Therefore, I hope that he will come with us today and support us in these amendments or, at least, tell us why he has changed his mind in the intervening period.

Lord Lloyd of Kilgerran

Now that the noble Lord, Lord Stoddart, has amplified his position in regard to Amendment No. 34, where there is set out a model for these participation agreements, may I refer the Committee to Amendment No. 28, to which I had not referred in opening as I had wished to hear what the noble Lord, Lord Stoddart, would say about the other amendments which I had posited with my amendments.

In Amendment No. 28 I have suggested that in order that these agreements can be activated quickly and also that the government can have full powers in the interests of national security, one of the conditions in the model clauses should ensure early activation of all participation agreements. What that means is left purposely a little vague, and it may be that the noble Lord the Minister will be able to indicate from his experience how early activation or participation agreements can take place. There is some anxiety that in a crisis it will be difficult to activate some of these participation agreements, even the agreements with the International Energy Association (the IEA) also in other crises. It may be difficult to activate them suitably quickly.

The next thing is that, when the agreements have been activated, I am advised that the Government ought to be able to have access to (which in effect means have control of) 80 per cent. of the crude oil produced in the United Kingdom continental shelf. In the usual participation agreements, I think the figure is 51 per cent.; but it would seem to me and to the persons who have approached me on these matters that a greater percentage of the crude oil should be available for access by the Government in moments of crisis.

Lord Gray of Contin

Perhaps I could start my reply to this series of amendments by dealing with the point about which my noble friend Lord Lauderdale asked me and which was touched upon by the noble Lord, Lord Stoddart, who quoted from some of the long and laborious speeches which I made through the middle of the night in the Committee stage of another Bill. I can assure the noble Lord, Lord Stoddart, that what I said about participation agreements at that time still stands today, and I can assure my noble friend Lord Lauderdale that we expect only minor changes as far as participation agreements are concerned. These would relate, for example, to assignments of licences and the fact that participation oil will not normally be lifted in future.

Minor changes may also have to be made from time to time to cater for changed circumstances and licensees' requests. But we certainly see no major change in the principle of the participation agreements. Indeed, I can say that one participation agreement is now time expired and needs to be renewed by a new one, and negotiations have been proceeding in order to achieve this new participation agreement for some time; but there are no major problems envisaged.

Perhaps I could remind your Lordships that participation is an extremely complex subject. I know this, I can assure your Lordships, after four years as Minister of State for Energy. But I shall be happy to respond to some of the points of principle which have been raised. Unfortunately, my response will also have to be somewhat technical on occasion because it is a very technical subject.

1.45 p.m.

The first positive point to make is that an important function of the new new agency will be to maintain the framework of participation as it exists already. Although we have had to learn that there are no advantages and several serious disadvantages in trading participation oil when supplies are plentiful, we recognise that participation oil could still be able to make a contribution to security of supply in a time of shortage. The Government and the agency will therefore continue to negotiate new participation agreements when oil fields in the future reach the development stage. It may reassure your Lordships to hear that BNOC and the Department of Energy are currently in active negotiation over participation terms with a group of licensees. I would suggest, however, that noble Lords opposite perhaps place too much emphasis on the contribution which participation could make to the security of supply. It is but one of a number of elements. The others—assurances from United Kingdom refiners, stocks, our understandings with other IEA member countries and our Energy Act powers—are very much more important. Indeed, when participation was in full flow in 1978–79 it was able to make precious little contribution to our supplies when these became short.

Amendments Nos. 20, 24 and 34 envisage that certain standard requirements will be included in participation agreements entered into by the agency. In fact, future participation will be either by petroleum option deeds, in respect of offshore licences issued from the seventh round onwards, or else by agreements negotiated with licensees holding first round to fourth round licences. Where agreements have to be negotiated from scratch with the licensees as new developments come forward—that is, with respect to the first round to fourth round licences—I suspect that the noble Lord has perhaps forgotten the experience of his colleagues when in Government. They, after due thought, concluded that participation must be achieved by voluntary negotiations with the licensees on a basis that should leave licensees neither better nor worse off. This principle has correctly remained central to the approach of successive Governments of both persuasions.

I must say that I found it a little difficult to understand how the noble Lord could expect the agency to be able to negotiate voluntary participation agreements if their hands were to be tied behind their backs because this Bill insists that certain provisions must be included in these agreements. We also need flexibility in negotiating participation agreements to take account of the differences between licensees: for example, if they are integrated companies or not; the differences between fields; offshore loading or pipeline fields; and, of course, changing circumstances in the world oil market.

I shall now comment briefly on each amendment in turn.

The Earl of Lauderdale

Before my noble friend goes on, may I ask him one question? He said that participation agreements will continue to be negotiated when fields reach the development stage. Does that mean that they will be negotiated at the time of the Annexe B applications or when theAnnexe B is granted; or are they quite separate from that?

Lord Gray of Contin

Yes, the participation agreement is something which we have always found in the past to be something which is not negotiated quickly. Such agreements normally take quite some time to negotiate and the Annexe B application time would be the start of that negotiation: it might then take some time to be concluded.

Amendment No. 20 envisages that the model clauses in new participation agreements will be published. In fact since the passage of the Participation Agreements Act 1978, a summary of each new participation agreement which identifies the parties to the agreement has been laid in the Libraries of both Houses. That meets the substance of this amendment, which I hope will not be pressed because it contains a number of drafting deficiencies, and it would also make the negotiating of agreements very much more difficult.

Amendment No. 21 would delete three lines from Clause 2(1)(c). It would remove the agency's power to give effect to all the participation agreements which have been entered into by BNOC and whose rights and obligations will be transferred to the agency. It would thus render the agency unable to maintain the framework of participation agreements, as we intend. I am sure that is not what the noble Lord had in mind, but that would be the effect of the amendment. In view of what I have said about Clause 2(1)(c), I trust he will not pursue this amendment.

Amendment No. 28, I fear, gives me some real difficulty. I understand the noble Lord's concern to maintain participation vigorously, but I hope that he has not perhaps become mesmerised by the percentages. I would be appalled if his amendment meant that every existing participation agreement had to be renegotiated, so that not some 57 per cent. but some 80 per cent. of production had to be available to the public sector. May I perhaps suggest that the noble Lord directs his attention more towards the assurances that we have obtained from the refiners? It is petroleum products rather than crude oil which our consumers will demand in a crisis. Again, Amendment No. 28 has a number of technical difficulties within it and I hope that the noble Lord will not pursue it.

Amendments Nos. 24 and 34 are somewhat intriguing. The word "seller" which occurs in what is intended to be Model Provision No. 4 (that is, lifting arrangements) in the schedule seems an odd one in this context. My advisers suggest that it is not very usual in participation agreements. Indeed, they think it is unique in that context to a particular agreement. Perhaps the noble Lord could tell me why he chose that term, because it is a most interesting coincidence. I believe that one arrangement which uses that term has a provision, as envisaged in the proposed amendment, for confidentiality which is binding both on the licensee and on BNOC.

I have explained how these amendments would prove impracticable in their present form. In fact much of what the noble Lords opposite are seeking will be negotiated in future participation agreements. I do not take issue with them for having put down their amendments in the form in which they have, because I realise they are trying to protect the future negotiation of these participation agreements. However, I think that when they consider carefully what I have said they will appreciate that much of what they seek to do will in fact be achieved by the arrangements we have prepared. On that understanding, I hope that these amendments might be withdrawn.

Lord Stoddart of Swindon

I have listened very, very carefully to what the noble Lord has said and I should like to thank him for his full explanation. I am glad to hear that the framework of participation oil will be retained and that, in the light of the need to renew some participation agreements, negotiations are already going on; but of course what we are concerned about is the nature of the agreements that will be arrived at and whether they will be sufficient to safeguard the country's oil supplies. What we are getting at in this amendment, and in another one which is to come, is the security of supply.

The noble Lord says that participation oil is not significant. I think some people would disagree with him there. I think participation oil at the present time amounts to something like 600,000 tonnes. In my view that is a significant amount; certainly it is about three times as much as is involved in royalty oil. So I am not at all sure that I agree with him when he says that participation oil is not significant.

He also said that when my colleagues were in Government, they and the Department of Energy agreed that licence arrangements should be freely negotiated. Of course that was in order that encouragement should be given to oil firms to explore and in order that they would not delay exploration. I believe those were the reasons. And, of course, the situation then was entirely different, was it not? We did have BNOC, with all its powers. Therefore the interests of the nation in regard to security of supply were being safeguarded by the state organisation, BNOC. We are now in a different situation, where BNOC is to disappear and we are to have a small agency taking its place. That is why we believe it is necessary to have in force the kind of model agreement that we are proposing, so that agreements are properly negotiated in accordance with the nation's interests and the interests of security of supply.

I really would like to think for a few more minutes about Amendment No. 24 and as to whether I should pursue that when we come to it. It is still before us, so I cannot indicate at this stage whether I shall move it, but certainly I shall be considering what the noble Lord has said before we come to it and then I will come to a decision as to whether or not to proceed with it.

Lord Lloyd of Kilgerran

I too, should like to thank the noble Lord for his very clear and concise explanation of matters relating to these five amendments. Two of the amendments are solely in my name and I should like to press the Minister a little further with regard to Amendment No. 28, which is concerned with the vital matter of security, which might arise in a crisis and with the Government's position in such circumstances. Is the noble Lord able to assure the Committee that the participation agreements which have been concluded can be activated at a very early date in order to deal with any crisis which might arise? I mentioned this in my speech in support of these amendments. So I wonder whether the noble Lord is able to comment on how early these agreements could be activated. If he cannot answer because of security reasons I shall quite understand and would welcome any reply that he can give on the matter.

As regards crude oil and the access to it, which my amendment takes as being 80 per cent., the noble Lord's answer to that seemed to be that 57 per cent. under present participation arrangements was adequate. Is he satisfied that 57 per cent. access to this crude is adequate in all circumstances? He said that it would be a difficult matter to renegotiate all these participation agreements; but if the national security is at stake it is not a very high price to pay. Can the noble Lord help me briefly about these matters?

2 p.m.

Lord Gray of Contin

What I can do is simply to remind the noble Lord that the participation agreements which have been negotiated have been negotiated freely by successive Governments of both political persuasions; and that they have been found to be satisfactory both to Government and to the companies concerned. As far as the implementation of their provisions is concerned, we see no difficulty in this.

As far as security of supply is concerned, I have tried to explain that participation oil is but one factor in a wide range of considerations which have to be taken into account as far as national security is concerned. We are satisfied that the requirements of national security are fully met under the arrangements which presently exist. More than that, I do not think I can add to what I have already said to the noble Lord.

Lord Lloyd of Kilgerran

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 21 and 22 not moved.]

Lord Lloyd of Kilgerran moved Amendment No. 23: Page 2, line 18, at end insert— ("(e) in the event of the privatisation of the British Gas Corporation to accept responsibility for such mechanism as may be deemed appropriate to handle the sale of royalty gas taken as royalty in kind on behalf of the Secretary of State.").

The noble Lord said: This amendment deals with a position that may arise when the British Gas Corporation is privatised. If that happens, there is bound to be considerable disequilibrium in energy resources available and no doubt the privatisation will be followed by a greater commercial interest in gas in this country and in North Europe. Therefore, the amendment is to the effect that in the event of privatisation the agency accepts responsibility for such mechanism as may be deemed appropriate to handle the sale of royalty gas, taken as royalty in kind on behalf of the Secretary of State.

The Minister, with his great experience in these energy matters, will understand the form of that kind of formula without my having to try to explain it. But there is great anxiety among large producers of oil that once royalty in cash is available as a result of privatisation that may lead in some circumstances to a disastrous effect upon the oil producers. It may discourage their exploitation practices at the present time, and so forth.

The Petroleum and Submarine Pipe-lines Act 1975 specifically has a section which deals with this question of co-operation with the Gas Corporation. I am referring to Section 12 of the Petroleum and Submarine Pipe-lines Act 1975, which is intituled, Co-ordination of activities of corporation"—

that is, the BNOC— —"and British Gas Corporation and their subsidiaries".

As I read the present Bill, that section has now been deliberately deleted. Therefore, the Government must have had in mind some consequence of the privatisation of the British Gas Corporation in the context of this Bill and the marketing position in relation to oil thereafter. I beg to move.

Lord Gray of Contin

Perhaps the noble Lord, Lord Lloyd, will forgive me if, before I deal with his amendment, I amplify what I said to him when he asked me about participation agreements being reactivated. I have been advised that there is something more which I should add. Participation agreements can be reactivated generally at between six and 12 months' notice. However, United Kingdom stocks are ample to cover that lead-in time in minor crises. And in major crises we can of course use our Energy Act powers. Perhaps I could deal with the amendment which the noble Lord has just moved. I think the noble Lord quite reasonably asked me at Second Reading—

Lord Stoddart of Swindon

Will the noble Lord give way? I was listening to what he said. Did he say that stocks of oil in this country would be and are adequate to deal with any difficulty in the lead-in time to activate a six months' notice?

Lord Gray of Contin

Yes, I did.

Lord Stoddart of Swindon

That is 180 days.

Lord Gray of Contin

The stocks available for a minor crisis are perfectly adequate. And if the crisis were to be more than a minor one, we then have the powers of the Energy Act which we can use to take whatever steps we require.

Lord Airedale

A crisis is surely something so severe that it seems a pity that one has to talk about "minor crises".

Lord Gray of Contin

I am afraid that this is something which frequently occurs within the terminology of the oil industry. The reason for referring to a "minor crisis" as opposed to a "major crisis" is that there are certain levels of crises which trigger various mechanisms, such as the International Energy Agency mechanism, or the mechanism of the Energy Act. Therefore, what we describe as "minor crisis" is one which is a situation of shortage, but not of acute shortage.

Lord Lloyd of Kilgerran

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 24 and 25 not moved.]

Lord Stoddart of Swindon moved Amendment No. 26: Page 2, line 18, at end insert— ("( ) In managing petroleum on behalf of the Crown and in trading petroleum under any participation agreement the Agency shall seek to serve, to the maximum possible, refining facilities in the United Kingdom.").

The noble Lord said: I beg to move the amendment standing in my name. The purpose of Amendment No. 26 is to promote British refineries which, as noble Lords know, have experienced decline in recent years.

Indeed, between 1975 and 1985 the United Kingdom refinery capacity fell from 143 million tonnes to 90 million tonnes, while production of crude oil grew from nothing to 120 million tonnes. That seems very odd indeed. It is even odder that only 37 per cent. of North Sea oil is refined in the United Kingdom and, bearing in mind the redundancies which have occurred in the refining industry of late, it is altogether reprehensible. Indeed, of 870,000 barrels of oil net after sale-back that were traded by BNOC itself in 1984, only 294,000 barrels went into the United Kingdom market, mostly into refineries. So BNOC has not performed as well as I should have expected.

What is more, the position is even more serious because, so far as I can gather, the EC wants an even further reduction in United Kingdom refining capacity of 12½ million tonnes a year. That is in keeping with the absurd suggestions that it so often comes out with. A further reduction of 12½ million tonnes in refining capacity by 1990 would hurt our refining industry very badly indeed. Only recently, we have heard of losses in refinery jobs. Llandarcy Refinery, near Swansea, is to be turned into a specialist refinery concentrating on the production of lubricants and other special products. This will involve the loss of 750 jobs out of a total workforce of 1,100 jobs—a very serious matter indeed.

The noble Lord will also know of the intention announced by Shell that, as a result, they say, of fierce competition and poor profitability, manpower at Stanlow will need to be reduced by 30 per cent. over the next two years. Since Shell employ 3,300 people at Stanlow, that means that the number will fall by 1,000. So that is a further 1,000 jobs that will be lost in British refineries. If that were not bad enough, Shell also plan to close the Teesside refinery. Indeed, they have probably ceased refining anything at Teesside by now.

As I said, the purpose of this amendment is to use and develop refining capacity in the United Kingdom to the greatest extent possible. I should really like to hear the noble Lord's views on this matter. I feel sure that he and the Government must be concerned about the continuing loss of refining capacity and the loss of jobs in the United Kingdom that goes with that. I am wondering whether he and the Government will have anything to announce this afternoon, or in the future, to ensure a greater amount of refining in this country and the protection of our own capacity and of jobs. After all, it is in refineries that the value is added, and I should have thought it was against the Government's general interest, and certainly against the nation's interest in balance of payments and balance of trade terms, to allow our refining capacity to continue to run down. I shall be very interested to hear the noble Lord's remarks. I beg to move.

Lord Gray of Contin

I can appreciate the concern of noble Lords in seeking to discuss the problems of the United Kingdom refinery industry, Naturally, the Government keep a close watch on developments in our refinery industry. United Kingdom refinery capacity continues to exceed normal demand by some 20 per cent. It is, of course, desirable that capacity in the United Kingdom should be sufficient to meet our own demands, but at the same time economic considerations must be taken into account. As I understand it, the amendment seeks to require the agency in trading or disposing of petroleum to try to ensure that United Kingdom refineries are given preference over any other potential purchasers. If this amendment were accepted, the agency would, therefore, be required to disregard any commercial and technical considerations, such as price or delivery arrangements, if the terms which a potential purchaser from abroad offered were preferable to those available on the domestic market; this would have a direct effect on Government revenues as the proceeds from royalty in kind would not be maximised.

2.15 p.m.

I accept that adequate refining capacity in the United Kingdom contributes to overall security. But requiring the oil handled by the agency to be sold only to United Kingdom refiners would not add to this. The Labour Government recognised this when Mr. Eric Varley as Secretary of State for Energy said in December 1974 that he did not wish to meet all United Kingdom demand from North Sea oil. He also did not stipulate that all United Kingdom continental shelf oil should be refined in the United Kingdom, but said instead that he might reasonably expect up to two-thirds of North Sea oil to be refined in the United Kingdom, depending on the level of production. Now, in normal circumstances, more oil products are produced by United Kingdom refineries than are needed to satisfy United Kingdom demand.

In fact in 1983 61 per cent. of United Kingdom continental shelf crude oil production, or 67 million tonnes, was exported, and our refining industry imported 34 per cent. of its crude requirements—that is, 23 million tonnes. The reason is quite simple. North Sea oil is high quality and therefore fetches a premium on the world market. The needs of the United Kingdom market can be met more cheaply by importing lower quality crudes to meet part of our refining requirements. What would happen if the agency were to sell royalty in kind only to United Kingdom refineries? Either of two things; or a combination. The royalty in kind oil would substitute for some of the imported crude. In that case either the agency would get for it only the lower price of the imported crude and we should forgo the North Sea premium; or prices of oil products in Britain would increase to cover the additional costs of the North Sea premium; or it would substitute for companies' own sources of United Kingdom continental shelf crude. I just do not see what the advantage of that would be. One thing it would not do is to lead to an increase of product exports. If such exports were profitable, they would be taking place anyway.

The noble Lord suggested that we might have further reductions in our refinery capacity as a result of EC pressure. All I can tell him on that is that we have had absolutely no requests from the EC for any further reductions in our refinery capacity. There was a criticism some years ago that we were taking a greater share of the captive refining capacity than some of our EC partners. My information now is that our partners in the EC, with one notable exception, have caught up with us. The reduction in refining capacity has evened out as a result.

As I said on Second Reading, we already have informal assurances from the oil companies in relation to oil products. These give us far greater comfort for our overall supply security than any straitjacket arrangement which might be proposed. It would anyway be an ineffective straitjacket without the goodwill of the oil companies themselves, who could merely reduce their acquisition of other crude by the same amount as the royalty in kind supplied to them. I hope that, in view of my explanation and the comments I have made, noble Lords may be prepared to withdraw their amendments.

Lord Stoddart of Swindon

I have listened very carefully to what the noble Lord has said. This is a complicated issue and I accept that it is a complicated issue. On the other hand, it is in the interests of the United Kingdom to have a refining capacity as high as possible on many counts; not only from the point of view of the security of the United Kingdom but because of the issue of jobs. It is all very well to talk about the premium on North Sea oil and the premium we get when we sell it abroad, but if by doing so we kill more and more jobs in Britain then part of that benefit is not available.

I should like to read what the noble Lord has said. It is an important issue and we may wish to return to it at greater length at Report stage. But, in the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Lloyd of Kilgerran had given notice of his intention to move Amendment No. 27: Page 2, line 19, after ("State") insert ("which shall not be unreasonably withheld save in respect of matters affecting national security, safety and agreements entered into with the International Energy Agency.").

The noble Lord said: When I put down this amendment, which was to limit the scope of the consent of the Secretary of State, I had not seen Amendment No. 29 put down by the noble Lord, Lord Stoddart of Swindon. In these circumstances, I do not propose to move my Amendment No. 27.

[Amendment No. 27 not moved.]

[Amendment No. 28 not moved.]

Lord Stoddart of Swindon moved Amendment No. 29: Page 2, line 27, at end insert— ("( ) In the event of the Secretary of State refusing his consent under subsection (2) above he shall make, as soon as possible after such refusal, a statement to Parliament explaining his reasons for doing so.").

The noble Lord said: The object of this amendment is to ensure that the Secretary of State, if he refuses his consent under Clause 2 to the agency to buy, sell or otherwise deal in petroleum on its own account, or to do what is permitted in Clause 2(2), shall report his reasons to Parliament.

The reason for this amendment is that the Secretary of State would have been bound before refusing his consent to have had a request from the agency. The agency—especially bearing in mind what the Committee has been told this afternoon about the high calibre of the agency's chairman and its other members—would not make such a request lightly. Therefore, for the Secretary of State to refuse consent would mean tht he was overriding the judgment of the chairman and members of the agency itself. In my view, that would be a serious matter. It is therefore a matter in which Parliament should have some interest.

We think the least interest that Parliament should have is an explanation or reason from the Secretary of State as to why he had refused a request from the agency to embark upon the activities mentioned in Clause 2.I hope that the Minister will consider this to be a reasonable and sensible amendment and that he will not resist it. I beg to move.

Lord Lloyd of Kilgerran

In the circumstances of Clause 2 of this Bill the refusal of consent by the Secretary of State is an important matter. It is a matter of considerable public interest. I would endorse what the noble Lord, Lord Stoddart, has said. Surely this is a matter that should be brought to the notice of Parliament. When a consent is refused, a statement to that effect, giving the reasons, should be made to Parliament.

Lord Gray of Contin

By comparison with some of the amendments we have been discussing recently, Amendment No. 29 is reasonably light. Successive governments have found that productive and frank discussions between them and the nationalised industries have been best served if they were not conducted in the full glare of publicity. Successive Oppositions have, for their part, always expressed the wish that public sector business should be conducted completely in public. That was no doubt done so that they could take full political advantage of any disagreements between the Government and the nationalised industries. At least, that would seem the logical reason for such a line. I can therefore appreciate why noble Lords have tabled Amendment No. 29.

I fear that there is a further good reason for my being unable to accept this amendment. It is that any trading by the agency inevitably involves third parties. Any disclosure of a lack of consent for such trading could breach the commercial confidence of those third parties. It would also breach the agency's commercial confidence and make it less easy to obtain the best price for royalty oil. All governments have rightly been very wary of betraying commercial confidences to third parties and I am sure that, on reflection, noble Lords will see the dangers involved. In those circumstances, I ask them to consider not pressing the amendment.

Lord Stoddart of Swindon

I have listened very carefully to what the noble Lord said and I understand some of the difficulties. However, I should like to reconsider this matter and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 agreed to.

Lord Stoddart of Swindon moved Amendment No. 30: After Clause 2, insert the following new clause:

("Security of supply agreement.

.—(1) The Agency shall have the power to enter into agreements on behalf of the Crown and at the request of the Secretary of State to secure the supply of petroleum and petroleum products.

(2) Such agreements shall include the provision that—

  1. (a) any company with production from the United Kingdom continental shelf shall continue to supply United Kingdom customers with crude oil and petroleum products with at least the quantities supplied over the previous year or contracted to supply over the coming year, and shall increase the supply where possible and still use its transportation and distribution system for this purpose; and
  2. (b) any such company shall make supplies at the prices ruling at the time of the request (or as otherwise determined by law and regulations).").

The noble Lord said: I move this amendment which stands in my name and that of the noble Lord. Lord Lloyd of Kilgerran.

This of course is an important amendment involving a new clause. This afternoon we have spoken briefly about security of supply. Indeed, it is the most important issue to arise from the proposals to abolish BNOC. The amendment was moved on Report in another place but, unfortunately, not carried. It is an amendment to which I attach a great deal of importance.

The purpose of the amendment is to ensure that the agency is given specific power to secure the supply of petroleum and petroleum products. Supply is secured, in part, by participation agreements but under the Bill these cannot be activated until between six and 12 months. Again, we spoke about this earlier but I was not satisfied with the assurances given by the noble Lord about the scale of supplies which are available. The interim is covered only by informal assurances by the major oil companies. Little is known about these assurances but their informality suggests that it would be preferable to convert them into something more binding.

I mentioned previously that there will be a loss of 600,000 barrels of participation oil and, whatever the Minister might think, I continue to believe that that is a powerful weapon in times of crisis or shortage. Indeed, it is not right—and I said this at Second Reading and I repeat it now—that at times of crisis the nation's oil supplies should be at the mercy of the big oil companies. It is the job of Government, not of private institutions, to safeguard the country's oil supplies in an emergency or crisis. No matter how public spirited the oil companies may be, their duty is to provide profit for their shareholders and it is the Government's duty to look after the nation's interests—and that interest in oil is the security of supply.

It is no good the Government protesting that participation agreements can be reactivated in time. I repeat, it needs six to 12 months' notice and that makes that route quite useless in times of crisis. At Second Reading, and in another place, we heard that there had been assurances from the oil companies, but we do not know what sort of assurances these are. We do not know whether they are oral or in writing, or whether they are enforceable; so what sort of agreements are they?

2.30 p.m.

We have had no information from the Minister in another place, nor indeed did we have proper information from the noble Lord on Second Reading. Of course we heard about the letter from BP. We still do not know the status of that letter. It was a letter from one bureaucrat to another. It was not at ministerial level. We do not know how binding that letter will be. We do not know how many other such letters exist. We have no idea whether or not the Government intend to have formal agreements with all the major oil companies. Indeed, the people and Parliament are being kept in the dark on the spurious pretext of commercial confidentiality, and frankly neither I nor the Opposition can accept that.

The nation's oil supplies are vital. They are vital to the nation's economic life. They may be vital to the very survival of the nation. It is simply not acceptable that the security of our oil supplies should be dependent upon either oral assurances or scraps of paper written to the Government by the big oil companies.

I think I have said enough to impress on the noble Lord that I was not convinced by what he told me at Second Reading and that I have not been convinced by anything that he has said yet this afternoon about security of supply, which is absolutely vital. The Opposition believes that it has to be properly secured. I believe that the amendment will go a long way to bridging the gap between the Opposition and the Government. Indeed, if the Government accept the amendment, it will give them the opportunity to show to the Opposition, to Parliament and to the nation that they are serious about securing our oil supplies in a proper manner. I hope that the noble Lord will accept the amendment. I fear that if he does not accept it, in this case I may very well feel that I shall want to test the opinion of the Committee.

Lord Lloyd of Kilgerran

In view of the very full and positive way in which the noble Lord, Lord Stoddart of Swindon, has expressed views with which I entirely agree, I shall not make a long speech about this matter. I raised it at Second Reading and asked the Minister what kind of agreement and assurances he had received. In the other place they were referred to as informal assurances. As a lawyer, I refer to them as gentlemen's agreements; and as practising lawyers we all know that, in the case of a dispute, gentlemen's agreements can cause endless trouble. I ask the noble Lord the Minister, who has great experience of the other place and in industry, to give some assurance in reply to the noble Lord, Lord Stoddart of Swindon, as to whether we are really relying only on informal agreements in the question of security, which is of such importance.

Lord Gray of Contin

This is by no means the first time that I have been involved in this argument. We have argued the question of security of supply over and over again in another place. It was one of the principal arguments throughout the debates which we had on the Petroleum and Submarine Pipelines Bill, which later became an Act in 1975, and it has featured in every piece of legislation which has had any bearing upon the oil industry.

Noble Lords opposite, quite properly, share the Government's objective to promote the security of our oil supplies, and I acknowledge that they have proposed this new clause with the intention of furthering this objective. However, I am not by any means persuaded that it would have the effect that they desire. I take that view for several reasons which I shall seek to explain.

First, any new system of security of supply agreements entered into by the agency would clearly be intended to replace the existing assurances which my department has obtained from United Kingdom refiners. I do not believe that noble Lords opposite are suggesting that United Kingdom continental shelf producers should be forced by statute to enter into security of supply agreements; merely, that they should be encouraged to do so voluntarily—and if we are talking about voluntary agreements, I should have thought that the Department of Energy could be expected to be more successful in obtaining voluntary co-operation than the agency. I believe that responsibility for security of supply initiatives should continue to rest with the department, and not be shifted to the agency.

I have been pressed to give further information about the informal assurances which the Government have received from the oil companies. As I explained at Second Reading, it would be quite wrong for Ministers to breach the confidence of a commercial organisation by making any comment whatever on the press speculation about the nature of any confidential security assurances which BP may have given to the Government. Equally fundamental is the question of whether we should seek informal assurances or formal agreements on security of supply. What we are concerned about is obtaining supplies at a time of shortage. We can be sure of only one thing: that it will be impossible to predict accurately in advance how any shortage may occur and develop, and what will become our priority needs at any time during the shortage. What we require is a flexible understanding with United Kingdom refiners to the effect that, whatever happens, they will do their best within the law to continue supplying their customers in this country.

The approach of the proposed new clause is quite different. Although the provisions which the new clause proposes might at first glance appear to be appropriate, considerable difficulties would be encountered if it was sought to put them into practice, since the requirement that agreements contain the provision specified might well prove to be out of step with the commercial facts. For example, the new clause proposed by the noble Lord speaks of United Kingdom continental shelf producers continuing to supply customers with at least the quantities supplied over the previous year. How could this apply to a licensee with an interest in only one producing field which had already passed its production peak? Who are the customers at a petrol station; how are the quantities supplied to them over the previous year known? Would there be an obligation to supply someone who had recently changed to another supplier?

The new clause also assumes a rather simpler pattern of trading for our continental shelf crude than currently occurs. With the larger volumes of UKCS crude now traded on the spot market, cargoes of crude are frequently not sold direct by a producer to a United Kingdom refiner. Indeed, cargoes of crude can sometimes be bought and sold 10 or 20 times before being delivered. It would be quite ludicrous if the agreements entered into between the agency and producers appeared to require that cargoes of crude in a period of shortage should be bought and sold by long chains in the same order as previous cargoes had been during the preceding year. In short, a system of contractual provisions of the sort envisaged by this new clause would entail considerable loss of flexibilty. What is required here is a loose-fitting garment and not a straitjacket.

For these reasons, I believe that we should be better served as a nation by the Department of Energy's obtaining informal assurances from United Kingdom refiners than by the agency's attempting to enter into formal agreements with UKCS producers. It has been suggested that formal agreements would be preferable because the oil companies would be contractually bound to comply with their obligations under such agreements and would not be bound in the same way if they had given informal assurances.

I can understand the frustration of noble Lords in being told that they cannot have detailed information about the assurances because these are commercially confidential. However, I would not expect the difference between what is legally binding and what is a commitment freely made by an oil company to the Government to be of any commercial significance. Perhaps noble Lords should be a little more trusting.

As I have already explained, if the oil companies became legally bound to honour certain commitments which were so inflexible that in a shortage they failed to serve the purposes for which they were intended, the national interest would have been better served if no such legal commitments had ever been made. In the event, since the agency would suffer no loss itself as the result of a breach of a supply contract, it would only be able to enforce its contract by seeking to obtain an injunction—a discretionary remedy whose availability could therefore not be guaranteed, particularly in a world oil market in which trading conditions were such that force majeure provisions in contracts might apply.

The new clause lays down conditions about the price of any crude oil and products which are delivered under the security of supply agreements. It is not clear what effect the condition stated in the new clause would have if it were to be included in any security of supply agreement. I doubt if any United Kingdom continental shelf producer would agree to a pricing condition other than one which allowed him to receive the market price prevailing at the time of delivery—and for good reason. Indeed, this was the principle accepted by the last Labour Government when they introduced participation agreements on the basis that BNOC's transactions should be at no gain and no loss to the corporation or to producers. Any other approach would not be in the national interest.

I explained at Second Reading the mess which the Labour Government got into in 1978–79 by imposing price controls during the last period of supply shortages. Price control would create widespread uncertainty and chaos; the only likely beneficiaries would be speculators and unscrupulous traders. It would remove from the United Kingdom all supplies of crude other than those covered by the agreements envisaged; thus it would stand to cost Britain both money and oil supplies. Except at a cost of a fortress Britain it would not be possible to sustain a policy of pricing United Kingdom continental shelf crude at lower levels than those prevailing on the world market, should we mistakenly seek to do so. Even if we were to succeed in keeping United Kingdom prices low, we could not insulate ourselves from the effects on the world economy of increased oil prices, and by the policies advocated by noble Lords opposite we would have added to those increases. I freely admit the immense damage caused by very sharp price rises, but the solution to that problem has to be sought internationally and not nationally.

I cannot accept this proposal. I think it would be damaging and dangerous. I hope that when the noble Lord has considered what I have said, he will agree to withdraw his proposal.

Lord Lloyd of Kilgerran

The noble Lord, Lord Stoddart of Swindon, and the noble Lord the Minister, informed the Committee that they had been participants in this arena of energy conflict for many years in the other place. Now it appears that we have a head-on confrontation again in this Committee.

As a new participant (if that is the correct word) in this arena, on a kind of maiden voyage, may I ask the Minister whether he does not agree—and I think he does—that security of supply is fundamental? He has very severely criticised the terms of this amendment. Will he not now consider it in the national interest that he should go away and reconsider the position that he has taken up, and whether a new formulation can be put forward at Report which covers this fundamental question of how security of supply can be ensured?

I am trying to be helpful. There is this conflict between one side of the Committee and the Government on this matter. There is no conflict that security of supply should be maintained. I therefore wonder whether the noble Lord the Minister can make some gesture, perhaps on the basis that this amendment is not adequately worded, to deal with this fundamental question.

2.45 p.m.

Lord Gray of Contin

I am grateful to the noble Lord, Lord Lloyd of Kilgerran. Although the noble Lord may be new to our energy debates, I am sure that the contributions which he has made during our deliberations today have been constructive and very welcomed by all of us. He has put me in rather a difficult position. I have made the Government's position perfectly clear. I certainly could not go along with what has been proposed this afternoon, but that does not mean that he and the noble Lord, Lord Stoddart, could not withdraw their amendment, think about it again and at a later stage bring back something which, after consideration, they believe is a little more appropriate.

I must be perfectly frank with the noble Lord. I cannot say that I am prepared to take this amendment back and look at it again from the Government's point of view because the Government's position is absolutely clear. On the other hand, if a completely new proposal were to be submitted at the Report stage, obviously I would look at it afresh and see whether it was likely to be any more acceptable than that which is being suggested this afternoon. However, I would not wish to deceive the noble Lords by suggesting that I could take this amendment away and bring back something better, because the Government's position on this issue is perfectly clear.

Lord Lloyd of Kilgerran

When I participate in the negotiation of agreements and this stage is reached I usually have to say to the other side, "I do not want to waste your time, and I certainly do not want to waste my time". What the noble Lord the Minister has said is no concession; it is no help at all. He has said to the noble Lord, Lord Stoddart, and I: "Go away, bring forward something else and the Government will consider it". However, if anything arises on Report, it will be considered by the Government. But if the Government are to maintain the same stolid position as enunciated by the noble Lord the Minister, we are wasting our time, and I do not want to waste my time in such a way.

Lord Airedale

Is not the difficulty about relying upon confidential secret assurances from the oil companies that the nation simply does not know whether or not such assurances are forthcoming? The nation must simply have blind faith that the Government have succeeded in obtaining confidential assurances from the oil companies. That is not a very satisfactory position for the nation to be in.

Lord Stoddart of Swindon

There is at least one matter on which the noble Lord and I can agree this afternoon, and that concerns the notable contributions which the noble Lord, Lord Lloyd of Kilgerran, has made to our deliberations. They have been excellent and helpful, and the Committee is very grateful to him for his participation.

I could spend a long time rebutting what the noble Lord the Minister has said, but it is quite obvious that the Government are completely inflexible on this issue. There is no meeting of minds at all; there is no give whatever to the very legitimate worries which have been expressed here this afternoon. In those circumstances, I fear that I cannot withdraw this amendment. Indeed, I must press it to a Division.

2.49 p.m.

On Question, Whether the said amendment (No. 30) shall be agreed to?

Their Lordships divided: Contents, 33; Not-Contents, 63.

Airedale, L. David, B.
Carmichael of Kelvingrove, L. Dean of Beswick, L.
Collison, L. Diamond, L.
Crawshaw of Aintree, L. Elwyn-Jones, L.
Ewart-Biggs, B. McIntosh of Haringey, L.
Fitt, L. Milverton, L.
Gallacher, L. Morton of Shuna, L.
Graham of Edmonton, L. Nicol, B.
Harris of Greenwich, L. Pitt of Hampstead, L.
Hatch of Lusby, L. Ponsonby of Shulbrede, L. [Teller.]
Hunt, L.
Jenkins of Putney, L. Stoddart of Swindon, L.
John-Mackie, L. Underbill, L.
Kagan, L. Whaddon, L.
Kirkhill, L. Wigoder, L.
Lloyd of Kilgerran, L. [Teller.] Winstanley, L.
Winterbottom, L.
Longford, E.
Airey of Abingdon, B. Hooper, B.
Alexander of Tunis, E. Ilchester, E.
Alport, L. Ingrow, L.
Ampthill, L. Killearn, L.
Auckland, L. Lauderdale, E.
Belstead, L. Lawrence, L.
Boothby, L. Long, V.
Boyd-Carpenter, L. Lucas of Chilworth, L.
Brabazon of Tara, L. McFadzean, L.
Brougham and Vaux, L. Mancroft, L.
Broxbourne, L. Marley, L.
Caithness, E. Marshall of Leeds, L.
Campbell of Alloway, L. Merrivale, L.
Campbell of Croy, L. Mottistone, L.
Cowley, E. Mountevans, L.
Cox, B. Mountgarret, V.
Craigavon, V. Nugent of Guildford, L.
Cullen of Ashbourne, L. Pender, L.
Denham, L. [Teller.] Rochdale, V.
Drumalbyn, L. Rodney, L.
Effingham, E. St. Davids, V.
Ellenborough, L. Saltoun of Abernethy, Ly.
Elles, B. Shannon, E.
Elliott of Morpeth, L. Somers, L.
Elton, L. Swinton, E. [Teller.]
Enniskillen, E. Teviot, L.
Glanusk, L. Thorneycroft, L.
Glenarthur, L. Trumpington, B.
Gray of Contin, L. Vivian, L.
Hailsham of Saint Marylebone, L. Wise, L.
Ypres, E.
Henley, L. Zouche of Haryngworth, L.

Resolved in the negative, and amendment disagreed to accordingly.

Clause 3 [Transfer to Agency of property etc. of Corporation]:

Lord Lloyd of Kilgerran moved Amendment No. 31: Page 2, line 30, at end insert ("but excluding for all purposes of this Act intellectual property rights and liabilities or obligations relating thereto.").

The noble Lord said: I was surprised earlier this morning to have descending upon me a note indicating how the clauses were to be dealt with. To me it rather muddled up my speeches in my approach to these matters. It is now a great surprise to me that the last two amendments allotted to me on this list relate to my own expertise; namely, intellectual property rights which have dominated my career for so long. To console members of the Committee, the fact that it has come into my own area of expertise means that I can be brief.

With leave of the Committee, I should like to speak also to Amendment No. 33. Amendment No. 33: Schedule 2, page 9, line 45, at end insert— ("(6) All intellectual property rights and liabilities or obligations, if any, of the Corporation shall be transferred to the Secretary of State or any body which he in his sole discretion considers appropriate.").

I wish to discover from the Government whether in the clause transferring all rights and liabilities from the BNOC to the new agency any intellectual property rights arise. The Minister may be able to say briefly that there are no such things as intellectual property rights arising and therefore we can dispose of this matter as simply as that. I should find it strange for two reasons if there are no intellectual property rights associated with BNOC. It has been trading extensively in this field and I know from my own experience that other traders in oil, the large companies, are surrounded by patents, trade marks and registered designs and have complicated agreements about transfer of energy rights. Therefore I should assume prima facie that there were some intellectual property rights roaming around, as it were. I usually find in commercial practice that when large organisations transfer their rights and liabilities they usually forget intellectual property rights which causes a great deal of trouble and large income for practising lawyers in that field.

The other reason I have been wondering whether intellectual property matters have been considered by the Government is that in the Oil and Gas (Enterprise) Act 1982 in Schedule 3 at paragraph 39 on page 65 is a reference to the Patents Act 1977. As far as my researches go there has not been a repeal of that part of the Oil and Gas (Enterprise) Act 1982. It may be that that section should be removed. The reference is to a curious section in the Patents Act which gives powers to the Government or whomsoever that in dealing with patent rights any activities outside the United Kingdom fall within the scope of the Act. Therefore, under Section 132 of the Act it is specifically stated that the patents Act 1977 would apply to territorial waters and to exploration underneath them; and also, what is more, that the Act will apply when an order is issued under the Continental Shelf Act 1964, and therefore the Patents Act will apply to that area.

I do not know whether BNOC were concerned with the exploration under any conventions or any orders under the Continental Shelf Act 1964 and I do not know whether in the jungle of Acts relating to pipelines, oil and petroleum any references to the Patents Act neutralise the reference to which I have referred. In those circumstances, perhaps the Minister may not wish to answer straightaway today on this matter because I did not give him any notice that I was referring to this particular section of the Patents Act. I beg to move.

3 p.m.

Lord Gray of Contin

In most circumstances I should feel greatly inhibited in replying to the noble Lord, Lord Lloyd of Kilgerran, on a subject in which he is a renowned expert, but I can, I am happy to say, tell him that BNOC's position as far as intellectual property is concerned is straightforward. When this Bill was being prepared, the Department of Energy asked BNOC what intellectual property it expected to possess at the transfer date. The corporation had a number of research agreements prior to the Britoil split but all of these were subsequently vested in Britoil.

The noble Lord's amendment proposed an alternative method for handling BNOC's intellectual property. Obviously, I should not wish to criticise the thinking behind what he has proposed. Indeed, if the corporation's rights to intellectual property had been inappropriate for transfer to the agency, his approach might well have been preferable. But, as the position is so straightforward, I can see no reason why the Bill should not transfer BNOC's trade mark to the agency, along with all the corporation's other property rights and liabilities. It will then be for the agency to decide on any steps which need be taken to protect the trade mark against its unauthorised use by others. I am grateful to the noble Lord for giving us the opportunity to discuss this point. I hope that what I have said will be acceptable to him.

Lord Lloyd of Kilgerran

I thank the noble Lord for that very concise statement. He has said that this intellectual property matter is absolutely straightforward. I will tell my friends who have asked me to raise this subject that it is not much good pursuing matters of this kind because if they are straightforward then patent lawyers are not usually very interested. In these circumstances I ask leave of the Committee—as a kind of epilogue to this wonderful debate, for which I am so grateful to the noble Lord the Minister for his tolerance and his kind words about me, and to the noble Lord, Lord Stoddart, for his kind words about me—to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 32 not moved.]

Clause 3 agreed to.

[Amendment No. 33 not moved.]

Schedule 2 agreed to.

[Amendment No. 34 not moved.]

Clauses 4 and 5 agreed to.

Schedule 3 agreed to.

Remaining clauses agreed to.

Remaining schedule agreed to.

House resumed: Bill reported without amendment.

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