HL Deb 10 June 1998 vol 590 cc997-1000

Lord Campbell of Croy asked Her Majesty's Government:

Whether their responsibility for the Falkland Islands includes devising systems to license exploration for oil and gas in the Falklands' exclusive economic zone and to license production, should commercial quantities be discovered, or introducing an associated tax regime.

Lord Whitty

My Lords, the Falkland Islands Government are responsible for granting licences for exploration and production of oil and gas in Falklands' waters, and also for the introduction of a suitable tax regime. However, they were assisted during the drafting of the relevant legislation by the DTI, the Inland Revenue and the Health and Safety Executive.

Lord Campbell of Croy

My Lords, I am grateful to the Minister for that reply. As exploration drilling has just started in the Falklands' designated sea-bed zone, has it yet been decided, if oil and gas are discovered, how any tax revenue will be divided between the Falklands Government and the British Treasury?

Lord Whitty

My Lords, although it is clear that any such revenue would accrue to the Falklands Government, revenue sharing was discussed with the islands' council during the recent visit of my honourable friend Tony Lloyd to the Falkland Islands in April. Both sides agreed to take forward discussions on arrangements for the sharing of potential revenues.

Lord Hardy of Wath

My Lords, can my noble friend the Minister confirm that Her Majesty's Government will make sure that the Falkland Islands Government receive all possible assistance to ensure that environmental considerations receive a very high priority?

Lord Whitty

Yes, my Lords; part of the advice received from British departments covers precisely those points.

Lord Skelmersdale

My Lords, can the Minister tell the House what the Government's reaction is to a recent statement by the Argentinean Government that they would charge a 3 per cent. revenue tax on any oil and gas found in the Falkland Islands?

Lord Whitty

My Lords, we are aware of that proposition and there is some draft legislation before the Argentinian congress. We do not believe that the Argentinian Government have the right to charge such revenues. Therefore, we hope that they will not proceed with such legislation. If they do, we would not regard it as acceptable.

Lord Dean of Beswick

My Lords, can my noble friend say whether this particular agreement concerning the Falkland Islands bears any relation to the deep sea mining agreements of some years ago when the USA was the only major power which would not sign them?

Lord Whitty

My Lords, I would need greater technical advice to know whether this related to the deep sea mining operations. However, I do know that the geology of the Falkland Islands area is very similar in many ways to that of the North Sea. Therefore, much of the expertise which was gathered by British companies and British Government agencies during the North Sea exploration is being made available to the Falkland Islands Government.

Baroness Hooper

My Lords, as far as concerns the special co-operation area, which is administered jointly by the British and Argentinian Governments, can the Minister tell the House whether the discussions which are being pursued have got as far as deciding what the tax revenue will be in that respect?

Lord Whitty

No, my Lords; not conclusively. The special co-operation area lies, I believe, to the south-west of the Falkland Islands and the co-operation between Britain and Argentina in that area sends a strong signal to the oil industry that we can co-operate. However, the technical details of both the tax and licensing regime have yet to be finalised. Indeed, discussions are still going on.

Lord Ironside

My Lords, while the Government can give very wise advice about the tax regime and its structuring, can the Minister tell the House what provisions will be made to pay for our military presence on the islands out of the revenue, if it materialises?

Lord Whitty

My Lords, I have already referred to the possibility of sharing revenue. However, that is not in any sense directly related to our continuing military presence. Whatever the revenue from oil exploration—and we must recognise that actual production of commercially usable oil is many years away—Her Majesty's Government retain a commitment as regards the defence of the Falkland Islands.

Lord Campbell of Alloway

My Lords, can the Minister tell the House what is the limit of the sovereignty of sea territoriality claimed by the Falklands?

Lord Whitty

My Lords, as regards the territorial waters, there is a 200-mile limit around the Falkland Islands, subject to the joint co-operation area to the south of the islands which is run by agreement between Britain and Argentina.

Lord Mackay of Ardbrecknish

My Lords, is the Minister aware that the assurances that he has just given the House are most welcome? Can the noble Lord give us a further assurance that the brief from which his answers have come has been copied to other Ministers in the Foreign Office and been read by them?

Lord Whitty

My Lords, I regret the way in which we have a cheap intervention from the Opposition Front Bench, which will not be appreciated by the Falkland Islanders. However, I can assure the noble Lord and the House that all Ministers who have responsibility for the Falkland Islands are aware of everything that I have told noble Lords today. That will continue to be the case.

Lord Callaghan of Cardiff

My Lords, will my noble friend the Minister confirm that he is replying to this Question because his noble friend Lady Symons of Vernham Dean is in North America? If that is so, will my noble friend assure her on her return that absolutely no one who knows her or anything about her work could ever accuse her of misleading the House?

Lord Whitty

My Lords, I warmly endorse the sentiment expressed by my noble friend. No Minister in this House in my time has shown greater diligence and respect for the requirements of this Chamber than my noble friend Lady Symons.

Lord Campbell of Croy

My Lords, has the designated area now been accepted internationally? In the area of special co-operation, agreed with Argentina, has the system of drilling licence applications yet been agreed with Argentina?

Lord Whitty

My Lords, as regards the noble Lord's second point, these are subject to continuing technical discussions. However, as regards the joint co-operation area, there is a willingness on the part of both Governments to state their sovereignty claims, to put them to one side and to co-operate in that area. The Falklands' territorial claim stems from the sovereignty of the Falkland Islands. Argentina has not accepted that claim. However, the British Government continue to assert it.

Lord Strathclyde

My Lords, is the noble Lord aware that everything he has said about the noble Baroness, Lady Symons, may well be true, but some serious accusations have been made which reflect both on her and on this House? Will he comment on whether or not she will be able to come to this House as soon as possible to make a Statement to clarify the situation?

Lord Whitty

My Lords, I am advised by my noble friends that those comments have little to do with the Question. However, the House should know that my noble friend has been in North America and is in North America today. She will obviously have seen the headlines and I am sure she will consider carefully what has been said. On her return she will, as always, take the appropriate action to respect the views and requirements of this House.