HC Deb 01 July 1976 vol 914 cc237-8W
Mr. Woof

asked the Secretary of State for Energy if he will make a statement about the progress of participation talks with BP.

Mr. Benn

I am glad to be able to announce that agreement has been reached today on the principles of upstream participation by the British National Oil Corporation in BP interests in commercial oilfields on the United Kingdom Continental Shelf discovered under existing licences and on co-operative arrangements between BP and BNOC downstream. Her Majesty's Government and BP have affirmed their intention to maintain effective consultation in the context of these arrangements. These understandings are set out in a Memorandum of Principles, a copy of which I have placed in the Library of the House.

Under the upstream arrangements, BNOC will have an option to take from the 1st January 1977 up to 51 per cent. of BP's oil from the United Kingdom Continental Shelf, net of royalty oil taken in kind. In recognition of BP's planning requirements, in 1977 and 1978 BNOC will sell back to BP's affiliates 100 per cent. of option oil taken. Thereafter, if the option is exercised, BNOC will sell to BP affiliates in 1979, 1980 and 1981 a proportion of the North Sea oil taken, subject to the supply by BP to BNOC of oil to the same value from other sources and subject to a force majeure clause providing for protection of the national interest. Further arrangements beyond that date will be a commercial matter between BP and BNOC.

Satisfactory arrangements have also been agreed whereby BNOC will hold 51 per cent. of BP's interests in those fields and will have an effective voice in their operation.

Downstream, BNOC and BP will seek to establish a long-term basis for collaboration. BP Oil will provide training facilities for BNOC staff and a non-voting presence for BNOC in its refining and marketing counsels, so long as BNOC does not operate downstream in the United Kingdom independently or in joint ventures with other companies.

These understandings make a significant contribution to the establishment of BNOC as a major force in United Kingdom oil operations, and afford a basis for co-operation between BNOC and BP to their mutual advantage. Within this same spirit, Her Majesty's Government and BP will maintain full consultation on matters of mutual concern.

I hope that similar arrangements for consultation will be included in participation agreements with other companies with major interests on the United Kingdom Continental Shelf.