§ Mr. Beaumont-Dark
To ask the Secretary of State for Trade and Industry whether British Gas has offered undertakings about contracting for new gas fields following the recommendations of the Monopolies and Mergers Commission's report on the supply of gas to contract customers.
§ Mr. Ridley
Yes. I have now accepted undertakings given by British Gas following discussions with the Director General of Fair Trading in the light of the Government's decision announced on 27 April 1989 about contracting for new gas fields. The undertakings are as follows:
1. British Gas plc ("British Gas") hereby undertakes to the Secretary of State for Trade and Industry that it will in good faith give constructive support to the efforts of gas producers towards the achievement of the target that 10 per cent. of the gas coming forward from new gas fields and contracted to be sold after 31 May 1989 should be supplied to the industrial and commercial market in the United Kingdom by suppliers other than British Gas by:
- (i) not purchasing more than 90 per cent. of the gas on offer to it in the period 1 June 1989 to 31 May 1991;
- (ii) not requiring, in contracts for the purchase of gas entered into after 1 June 1989 under which British Gas does not buy the whole of the recoverable reserves of a field, the inclusion of terms which would unreasonably constrain the ability of the gas producers to dispose of the gas not sold to British Gas into the industrial and commercial market in the United Kingdom;
- (iii) expeditiously co-operating in setting up and conducting negotiations for the securing of rights to have gas conveyed in its pipelines under Section 19 of the Gas Act 1986 (common carriage). In particular British Gas will, within four weeks of any application to it for such rights containing sufficient information for the purpose, provide to the applicant a full response thereto setting out the terms and conditions (including price) offered by it for the exercise of such rights or, as the case may be, an explanation of the reasons why such application cannot in full or in part be complied with. In the case of exceptionally complicated applications to which it is not possible to provide a full response within four weeks, British Gas will provide whatever information it can within that time and undertakes to provide a full response without unnecessary delay;
- (iv) not otherwise doing anything calculated to obstruct the achievement of the target.
2. For the purpose of this Undertaking, in assessing the achievement of the 10% target level there shall be taken into account both gas coming from the United Kingdom Continental Shelf and gas imported from foreign sources.
3. British Gas will provide to the Director General of Fair Trading any information to which it has access which the Director General may require to assist the Government in ascertaining whether the target level has been achieved or the undertaking in paragraph 1 fulfilled.
The Government are very pleased that British Gas has given these undertakings which are a declaration of good faith by British Gas that it will co-operate in establishing competitive suppliers of gas. I would like to emphasise again the importance which the Government attach to the development of competition in the supply of gas to business users and their determination to encourage the emergence of such competition. This should give greater confidence to gas producers and independent gas suppliers selling gas directly to the market in competition with British Gas. I hope that they will take advantage of this new opportunity. If they have any concerns about the development of competition in the market they should make representations to the Director General of Fair Trading who will be able to look into the matter.