§ Mr. FavellTo ask the Secretary of State for Energy, further to his reply of 15 December,Official Report, column 682, if he will undertake an assessment of whether all the parties to joint operating agreements who will ultimately be responsible for the costs of abandonment of North sea offshore installations will be able to meet their commitments; whether sureties were taken out to ensure that there would be no cost to the taxpayer; and if he will make a statement.
§ Mr. Peter MorrisonOne of the primary purposes of the Petroleum Act 1987 was to protect the taxpayer against the risk of the parties to joint operating agreements (the JOA parties) defaulting on their financial obligations for abandonment. The obligations upon the JOA parties are joint; if one or more of them defaults, the others must meet the whole obligation. Further, the Secretary of State may extend the abandonment obligation to associates, including parents and subsidiaries, of the JOA parties. Once an abandonment programme has been approved, if the Secretary of State is not satisfied that a company will be capable of discharging its obligations under it, he may require the company to take such action as he may specify, for example forfeiting oil to the Government.