Participation Agreements (Hansard, 25 January 1977)

§ Mr. Benn

, pursuant to the reply [Official Report, 21st December 1976, Vol. 923, c. 123], gave the following further information:

The following is the text of a joint statement made today by the Department of Energy, the British National Oil Corporation and Texaco North Sea U.K. Limited: Her Majesty's Government, BNOC and Texaco have today signed a Memorandum of Principles setting out the arrangements to be concluded between them to give effect to Her Majesty's Government's policy of securing majority State participation in commercial oilfields discovered by Texaco under existing licences. It is proposed that definitive agreements should be completed by April 30, 1977. At the present time Texaco holds a sub-licence interest in the Argyll Field which is being produced commercially. Texaco also holds interests in various licences within which discoveries have been made and work is currently under way to evaluate the potential for commercial development. Texaco is also continuing exploration activity within 504W their licence area. Should any of Texaco's discoveries be declared commercial then they will become subject to the Memorandum and proposed agreements. The Memorandum of Principles has substantially the same form as the arrangements recently concluded with Shell and Esso. As in the case of Shell/Esso the agreements provide for consultation between HMG, advised by BNOC, with respect to the Company's petroleum operations in the UK and allows for BNOC to become a joint licence holder with Texaco in commercial oilfields discovered under existing licences. BNOC will have the right to acquire at market prices up to 51 per cent. of Texaco's share of oil produced from such discoveries. The agreement also provides for the sale by BNOC to Texaco of up to 100 per cent. of this oil following such consultation with HMG and the Company on a basis which protects the Company's commercial activities. The Company has declared its intention to use any UKCS oil from existing licences in support of its UK feedstock requirements; to optimise the use of UKCS oil in relation to the UK market; and to trade at fair prices, using its best endeavours to safeguard the UK Government's petroleum revenues and maximise the benefit to the UK balance of payments. The agreement will give BNOC the right to information customarily enjoyed by co-licensees together with an effective voice and, in fields where other companies have interests, a vote (hut not a veto), in the development and operation of the fields and associated facilities. It also allows for training by Texaco of BNOC personnel. The arrangements as concluded and implemented will fully meet HMG's participation objectives while safeguarding the interests of Texaco.

The following is the text of a joint announcement made today by the Secretary of State for Energy, the BNOC, Mobil, Texas Eastern and Amerada Hess: Her Majesty's Government, the British National Oil Corporation (BNOC), Mobil, Texas Eastern and Amerada Hess have signed Memoranda of Principles setting out the arrangements to be concluded between them to give effect to the policy of HMG of securing majority State participation in commercial oilfields discovered under existing licences, leaving the companies no better and no worse off financially. The Memorandum signed with Mobil is in substantially the same form as those recently agreed with Shell and Esso, and in addition contains certain specific provisions relating to the Beryl Field, the participants in which also include Texas Eastern, Amerada Hess and the Britsh Gas Corporation (BGC). As with other participation 505W agreements, BNOC will have the right to acquire up to 51 per cent. of Mobil's petroleum production at international market price except where Mobil is a joint licensee with BGC (as in the case of the Beryl Field) where the percentage will be reduced to take account of the interests of the BGC. Similarly, there are provisions for BNOC to sell back any crude oil taken from Mobil in order to meet the UK marketing and refining needs of Mobil. The Company has declared its intention to use any UKCS oil from existing licences in support of its UK feedstock requirements; to optimise the use of UKCS oil in relation to the UK market; and to trade at fair market prices using its best endeavours to safeguard UK Government petroleum revenues and maximise the benefit to the UK balance of payments. The Memorandum covers all future commercial fields discovered under existing licences held by Mobil. The Memoranda signed with Texas Eastern and Amerada Hess relate solely to their interests in petrolum production under licence P139, the licence covering the Beryl field in Block 9/13. BNOC has the right to acquire at international market price up to 45½ per cent. (which again allows for the BGC interest) of the companies' petroleum production from the Beryl field. In the case of crude oil, the right commences on 1 January 1979. Should either company engage in refining in the UK, then BNOC will be willing to sell back oil to the company under arrangements similar to those reached with Mobil. Each of the above Memoranda provide for BNOC to have the right to information and an effective voice with specific voting rights under the Beryl field operating agreement.