HC Deb 04 February 1976 vol 904 cc616-8W
Mr. Doig

asked the Secretary of State for Energy what action he is taking in connection with petroleum production licences held by the Occidental Group.

Mr. John Smith

The Occidental Group holds two petroleum production licences, N. P220, which covers part of Block 15/17, the Piper Field, and No. P247 which covers blocks Nos. 9/26, 15/11, 15/15, 210/29/ 14/19 and part of block No. 15/17. Two members of the group, Occidental and Thomson, are engaged in negotiations, expected to close shortly, with banks for finance for their share of the development cost of the Claymore Field. My right hon. Friend's consent has been sought to those aspects of the proposed arrangements which require it, including the amendment of Licence No. P247 to cover the Claymore Field only, part of block 14/19, and the issue of a new licence, No. P248, comprising the remainder of the areas mentioned above. It has been represented to my right hon. Friend that, because the present Regulations require publication of invitations to apply for licences, there is some doubt relating to the procedure by which Licence P247 was issued. This arose because the licence was issued in substitution for a part of a previous licence, which the licensees voluntarily surrendered. It has been represented to my right hon. Friend by lending banks that this doubt could affect their security. My right hon. Friend considers that the licences in question are, and always have been, valid, and that the risk of successful challenge is negligible. However, in view of the need for lending banks to have firm assurance about their security, my right hon. Friend proposes in these special circumstances to give an indemnity against losses or expense which might arise in the unlikely event of a declaration from the courts that the licence was invalid. Parliamentary authority for this is being sought by means of a token Supplementary Estimate.

It is my right hon. Friend's intention to lay before Parliament for approval in the very near future a Regulation or Regulations which will, inter alia, enable a new licence to be issued which will overcome the doubt raised in this case. If Parliament approves these measures and, in consequence, new licences are offered to the licensees, then upon surrender of the present licences against the grant of new ones the indemnity will be terminated. My right hon. Friend's contingent liability will consequently be of short duration.