§ Mr. McElhone
asked the Secretary of State for Energy what discussions he has had with licensees of the Thistle field on the development of that field.
§ Mr. Varley
Discussions have taken place between my Department and the licensees of Block 211/18—the Halibut group—led by Burmah Oil Development Limited as operator. It was represented to my Department that certain of the smaller licensees without immediate access to the necessary resources were having difficulty in present economic conditions in entering immediately into commitments for their share of the development cost of the field, and that if this was not resolved there could be a year's delay to the development of the field and the commencement of oil production. It is important to the national economy as a whole, and in particular to the balance of payments, to bring oil ashore from the United Kingdom Continental Shelf as early as possible.
For this reason, my Department told the licensees that Ministers would be prepared to seek the approval of Parliament for the giving of an assurance to certain of them provided that they for their part undertook to proceed immediately with the contractual commitments necessary to ensure the continuance of the planned field development programme and to continue to use their best endeavours to avoid delay to the development of the field.
The licensees have informed my Department that they have entered into the necessary contractual commitments. They have also given the undertaking requested of them.
Subject to the obtaining of the necessary parliamentary authority the assurance being given to Burmah Oil Development Ltd., Champlin Petroleum Ltd., Santa Fe (UK) Ltd., and Charterhouse Securities Ltd. provides as follows. If at any time Tricentrol North Sea Ltd. 573W or United Canso Oil and Gas (UK) Ltd. or both companies should not meet a request for their share of any cash call made in respect of the development of the Thistle Field, and if no other acceptable arrangement such as assignment of the defaulting party's or parties' interest to a firm acceptable to me should be available, the Government will, subject to any necessary amendment in the operating agreement, take over the interest of the defaulting company or companies in Block 211/18, meet its or their share of the future, but not past, costs of the Thistle field, and take its or their share of oil produced from the field.
This assurance does not entail any guarantee of or obligation towards Tri-centrol North Sea Ltd. or any company connected with it or any guarantee of or obligation towards United Canso Oil and Gas (UK) Ltd. or any company connected with it. It does not provide anything to Burmah Oil Development Ltd., Champlin Petroleum Ltd., Santa Fe (UK) Ltd., and Charterhouse Securities Ltd. other than the contingent guarantee in respect of default by Tricentrol North Sea Ltd. and / or United Canso Oil and Gas (UK) Ltd.
The contingent liability of the Government under this assurance could, it is estimated at present, total up to £70 million over two years—that is the remaining programmed period of the development of the field. I shall be proposing powers in the Petroleum Bill to cover this contingency.