North Sea Oil (Hansard, 1 March 1976)

§ Mr. Skeet
asked the Secretary of State for Energy how many of the existing North Sea commercial oilfields would be economically viable under the present fiscal package if the oil price fell to a $7 barrel floor price which is thought to be acceptable to the EEC.

§ Mr. John Smith
It is for the licensees to judge the economic viability of individual fields and I have every reason to suppose that the development of the existing commercial North Sea oilfields is proceeding in the expectation by the licensees of satisfactory returns on their investment. Their development plans will naturally have taken account of a number of risks. I believe that a $7 floor price together with the Government's 425W special provisions for marginal fields would provide sufficient protection against these risks.

§ Mr. Skeet
asked the Secretary of State for Energy what effect the increase in crude oil prices will have upon the smaller North Sea oilfields compared with the larger ones bearing in mind the lower commitment of the former to capital expenditure.

§ Mr. John Smith
The measurement of profitability involves assessment of the interaction of costs, prices, taxes and expected revenues. Since each oilfield has unique characteristics it would be misleading to generalise about the relative effects of oil price changes on small and large fields.

§ Mr. David Howell
asked the Secretary of State for Energy what his current best estimates of North Sea oil production in the years 1976 to 1980 will imply for imports, gross exports and net exports of petroleum and petroleum products, in approximate terms if need be (a) at current price levels—or other price levels he feels may be more appropriate—and (b) at 1970 factor cost prices.

§ Mr. John Smith
Estimates of the volume of production of oil from the North Sea and the demand for oil in the United Kingdom in the years 1975 and 1980 were given in the Department's evidence to the Select Committee on Science and Technology Energy Resources Sub-Committee on 12th March 1975—Minutes of Evidence page 200. Because of the uncertainty surrounding future international oil market conditions it would not be useful to publish specific forecasts of trade in oil.