Offshore Petroleum Licensing (Hansard, 5 December 1979)

§ Mr. David Howell

The Government have previously declared their objective that exploration of the oil and gas 221W resources of the United Kingdom Continental Shelf should go forward with increased momentum. This is necessary if we are to be able to develop new fields in the years ahead when production from existing fields starts to tail off. To this end, it is important for companies to push ahead with exploration and appraisal under existing licences; in addition, I intend to get a new round of offshore licensing under way as soon as possible.

It is important that our offshore licensing system gives encouragement to the oil industry, which has to invest in exploration and development effort, and at the same time safeguards the nation's essential interests in our resources. We need a new direction and impetus to our offshore licensing policies. I now therefore propose that the seventh round should include the following principal features:

(a) The aim will be to license in total about 70 blocks.
(b) Some blocks in deeper water should be included in the round. It is important that we should start to explore territory in progressively deeper waters and gain experience of the problems involved.
(c) In the generally well explored area of the northern North Sea, broadly between 56 north and 62 north, and east of the Greenwich meridian, companies should be able to apply for blocks of their own choice, in addition to their application for blocks listed by my Department: licensing would be subject to the normal consideration of other activities in the area.
(d) BNOC and BGC will have the same opportunities to apply as private sector companies, but will no longer have a mandatory majority interest in future licences.
(e) Consistent with the policies I announced on 26 July, the arrangements will give BNOC an option to take at market value up to 51 per cent. of the petroleum produced under the new licences.

I now intend to discuss my detailed proposals for future licensing with those involved. I shall welcome the views of interested bodies about which offshore areas might be licensed over the next few years and in particular their views on areas where they believe special care may be needed in the conduct of exploration and development for environmental, fishing, or other reasons. In this respect, I am considering including in the seventh round the offer of blocks for licensing in the following areas; north and west of the Shetland Islands, the northern North Sea, the Moray Firth, the southern North Sea, the South-West Approaches, 222W the Irish Sea and central and inshore areas of the English Channel.

The Government believe that these proposals will result in a positive response from the industry, large and small companies alike, and will lead to an increase in exploration activity on our Continental Shelf.