§ Mr. Moonmanasked the Chancellor of the Duchy of Lancaster when he now expects to complete the first agreement with an oil company for Government participation in the North Sea.
§ Mr. LeverThe Government and the British National Oil Corporation have today concluded agreements with Continental Oil Company and Gulf Oil Corporation302W which secure majority State participation in those companies' interests in oil fields in the United Kingdom Continental Shelf. These are the first participation agreements to be signed. The terms of the agreements secure for BNOC and the nation the participation objectives set out in the July 1974 White Paper (Cmnd 5696) as elaborated by the Government from time to time. They leave the companies financially neither better nor worse off. The negotiations have been conducted throughout on a voluntary basis and I should like to express my appreciation of the constructive spirit in which the companies have sought to accommodate the Government's objectives.
Conoco's and Gulf's interests in the United Kingdom Continental Shelf include a stake in the commercial fields Thistle, Dunlin and the United Kingdom part of Statfjord. In these commercial fields, as in their other North Sea oil interests, each company has an equal stake with the other and with National Coal Board (Exploration) Limited—now a subsidiary of BNOC. These existing arrangements give BNOC full access to information and an effective voice in control. The new agreements with the companies build on this position. BNOC's title in the licences is raised to 51 per cent. by assignment of the appropriate proportion of each company's interests, but subject to the retention by the companies of their existing obligations and beneficial interests. For example, BNOC will not provide any additional contribution to costs beyond that arising from its existing one-third interest through National Coal Board (Exploration): the companies will continue to be responsible for capital and operating costs arising from the assigned interest and for the provision of royalty. Similarly, each company retains the beneficial interest in one-third of the oil produced; but the Corporation obtains rights to extra oil under an option agreement extending throughout the life of the fields. This will permit the Corporation to build up a right to purchase oil from the companies at market price, to supplement existing rights to oil under the licences. It will ensure control for the nation over 51 per cent. of the oil produced by the group from each field three years after the year in which commercial production begins, rising to 57 per cent. after five years.
303WThese arrangements are not a blueprint for future agreements—there is no single standard participation model, because circumstances vary from case to case. However, the fact that two major American oil companies have freely entered into participation arrangements will, I am sure, encourage others to work with us to realise our objectives throughout the North Sea.