§ Mr. Campbellasked the Secretary of State for Energy whether any further participation agreements have been concluded with North Sea oil companies.
§ Dr. J. Dickson MabonI am pleased to inform the House that the Government and BNOC have today concluded a participation agreement with Ranger Oil (UK) Limited in respect of their interest in the Ninian field. This is the first participation agreement in Ninian although BNOC is of course already a partner in the field through the recent purchase of the Burmah interest.
Through this agreement, BNOC becomes a licensee of licence P199 which covers block 3/8. BNOC also becomes a party to the Operating Agreement regulating the management of this block and a member of the Ranger Group Agreement with 51 per cent. of Ranger's vote. Operation of the Ninian field, which straddles blocks 3/3 and 3/8, will be governed by a unitisation agreement. Arrangements have been made for BNOC, 304W through its participation interest, to become a party to that agreement when it comes into force. Meanwhile BNOC is a member of the existing Ninian Management Committee. By virtue of these arrangements, Ranger have assigned to BNOC 51 per cent. of their interest in the Ninian field on a basis which leaves Ranger with the full financial benefits and liabilities relating to that interest. BNOC may, at its option, retain at market price sufficient oil from the assigned interest so that, should royalty be taken in kind, BNOC will have access to 57 per cent. of Ranger's oil. The Government's rights under the licence to royalty are not affected by the participation agreement. The participation agreement will, therefore, entail no increase in public expenditure, except in the event that Ranger are unable to meet the financial commitment.
My right hon. Friend has also consented today to a financing arrangement for Ranger's share of the development costs of the Ninian field. A syndicate of banks have agreed to advance to Ranger sums of up to $120 million. This bank loan is to be guaranteed by Chevron Petroleum (UK) Limited and by Chevron's parent company Standard Oil of California. The amounts advanced to Ranger under a bank loan guaranteed by me and announced to the House on 25th November 1975 (Official Report, Vol. 901, c. 87) have been repaid and that guarantee has been discharged.
The Government's policy objectives of securing majority state participation in licence interests in commercial oil fields discovered under existing licences and of promoting the development of the petroleum resources of the United Kingdom are met in the case of Ranger's Ninian interest by this participation agreement and of the financing arrangement.