§ Mr. Canavan
asked the Secretary of State for Energy whether the assurance announced on 19th December 1974 has resulted, as hoped, in the uninterrupted development of the Thistle Field in the North Sea.
§ Mr. Varley
The assurance given by the Government has resulted in the licensees of Block 211/18—the Halibut Group—led by Burmah Oil Development Ltd. as operator proceeding as planned with the development of the Thistle Field.
In the present international economic climate, Tricentrol North Sea Ltd., which has an 8.4 per cent. interest in the field, has not been able to make provision for project finance for its share of development cost of the Thistle Field, as had been hoped. My Department has been having discussions with Tricentrol, which has informed the Department that the company will be able to make the necessary arrangements for finance should a certain formal guarantee be given.
Subject to the obtaining of any necessary parliamentary authority, a guarantee will be given as follows: the Government will, subject to certain conditions, guarantee the repayment of advances up to a maximum sum of £38.3 million, including interest, made by banks to the company for defraying the company's share of the 148W cost of development of the Thistle Field. As consideration for this guarantee, the Government will be paid an amount to be expressed as a royalty on the wellhead value of oil over the life of the field. The minimum royalty payable will be 5 per cent., with the option to take this in oil. The term of the guarantee will depend on the date when the field comes into full production. It will not be later than 31st December 1980. After the conclusion of a 51 per cent. participation agreement the Government may, subject to a full review of the position, and having particular regard to the continuing viability of the field, change the ceiling for a guarantee in respect of the company's residual 49 per cent. interest to £25.02 million, being the appropriate proportion of £51.1 million, including interest, advanced by the banks to Tricentrol North Sea Ltd. in connection with the Thistle Field. If the Government are called upon to implement their guarantee, the benefit of the banks' securities would be transferred to the Government, but the Government would allow Tricentrol to retain a residual working interest related to its actual exploration and development expenditure in connection with the Thistle Field in Block 211/18. This guarantee relates only to advances by banks and interest accrued thereon in respect of the 8.4 per cent. interest of Tricentrol North Sea Ltd. in the Thistle commercial Field in the North Sea.
In recognition of the Government's giving the guarantee mentioned above, Tricentrol North Sea Ltd. has agreed in writing that it will grant 51 per cent. participation in its interest in the Thistle Field for value to the Government on terms and conditions presently being negotiated, the agreement to be concluded as soon as possible. Among the terms and conditions being negotiated would be provisions to safeguard the position of lending banks.
The arrangements described above extinguish the Government's contingent liability in respect of Tricentrol North Sea Ltd. under the assurance given on 19th December 1974.—[Vol. 883, c. 572–3.]