Oil Industry (State Participation)

– in the House of Commons at 12:00 am on 8th March 1976.

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Photo of Dennis Canavan Dennis Canavan , Stirlingshire West 12:00 am, 8th March 1976

37. Mr. Canavan asked the Chancellor of the Duchy of Lancaster whether he will now make a further statement about the progress of his negotiations on participation with the oil companies.

Photo of Mr Harold Lever Mr Harold Lever , Manchester Central

As I informed the House on 26th February, participation agreements have now been concluded with Gulf and Conoco. Negotiations with other companies are continuing to make progress.

Photo of Dennis Canavan Dennis Canavan , Stirlingshire West

As the publicly-owned National Coal Board was already in equal partnership with Gulf and Conoco in three oilfields, is it not true that in this case my right hon. Friend has been successful in acquiring not 51 per cent. but only about 17⅔ per cent.? Can he explain how on earth the British National Oil Corporation can work successfully unless it has 51 per cent. of the shareholding votes?

Photo of Mr Harold Lever Mr Harold Lever , Manchester Central

My hon. Friend is quite correct in believing that we already had a substantial public interest before these negotiations started. We have now added to it precisely in accordance with our target—namely, to bring it up to 51 per cent. As to the problem of gaining 51 per cent. of the votes, my hon. Friend must realise that these are syndicated partnerships and no major decision can be taken except with the unanimous consent of all parties. Percentage control of the oil is a matter of great importance and that has been achieved, but these syndicated partnerships work only where it is possible to get unanimity. Otherwise, they are useless and unproductive.

Photo of Mr John Hannam Mr John Hannam , Exeter

Is the right hon. Gentleman aware that the Secretary of State for Energy stated in a speech in the United States that the Government had neither the intention nor the resources to acquire majority participation in North Sea oil companies? So why do the Government continue with the farce of the BNOC?

Photo of Mr Harold Lever Mr Harold Lever , Manchester Central

No doubt the hon. Gentleman follows with great zeal and in detail the pronouncements of all my right hon. Friends, including the Secretary of State for Energy. I have not studied the speech to which he refers, but I can assure him that the Secretary of State could not have said that the North Sea oil proceedings were a farce. Neither I nor the oil companies regard them as a farce and they will not prove to be so.

Photo of Mr Peter Hardy Mr Peter Hardy , Rother Valley

Does my right hon. Friend expect any further negotiations in the near future? In carrying out those negotiations, will he bear in mind the urgent need for construction orders for the various platform sites around Scotland?

Photo of Mr Harold Lever Mr Harold Lever , Manchester Central

We are pressing forward with the negotiations. There is every reason to believe that we are making healthy progress and will continue to do so. I shall certainly bear in mind the point made by my hon. Friend about construction orders.

Photo of Mr John Biffen Mr John Biffen , Oswestry

In the light of the participation deal concluded with Gulf Oil and Conoco, does the right hon. Gentleman agree that it is a perfectly legitimate interpretation to say that it is possible to get 51 per cent. partnership without any impact on equity ownership?

Photo of Mr Peter Rost Mr Peter Rost , Derbyshire South East

How can the right hon. Gentleman claim that the negotiations are voluntary when the Secretary of State for Energy has admitted that he will use his patronage to allocate future licences in the North Sea only to those who surrender participation?

Photo of Mr Harold Lever Mr Harold Lever , Manchester Central

With great respect to the hon. Gentleman, I must say that he misunderstands the meaning of the word "voluntary". Very few things in this life are voluntary in the somewhat wide metaphysical sense that it is understood by the hon. Gentleman. By voluntary negotiations, we mean that we have taken no legal powers and do not feel such powers will be necessary.

Photo of Mr Peter Rost Mr Peter Rost , Derbyshire South East

The Government do not need them.

Photo of Mr Harold Lever Mr Harold Lever , Manchester Central

The hon. Gentleman can either listen to my answer or sit there barking from the Back Benches. He has the choice in the limited time at our disposal.

These agreements attempt to align the Government's undoubted public responsibility for the handling and control of North Sea oil and its development with the commercial interests of the companies concerned. We believe that this has been achieved in the agreement to which I referred earlier and in the agreements which are now in progress. The agreements are not meaningless and were not made by statutory coercion or any other improper means.

Photo of Dennis Skinner Dennis Skinner , Bolsover

Is it not true that the Labour manifesto requested my right hon. Friend and his right hon. Friends to get 51 per cent. participation? Has he not got only 51 per cent. of the ability to purchase for the BNOC and not 51 per cent. of the investment or the votes? Is not that the message which Labour voters should clearly understand?

Photo of Mr Harold Lever Mr Harold Lever , Manchester Central

I am sure that the Conservative Party will be greatly indebted for the polemic to which we have been treated. The purposes of the manifesto are being achieved. If my hon. Friend will inform himself of the tax regime, the pipeline control, the pollution and depletion regulations, together with our seats on the operating agreement and the control of oil which results from these agreements, he will satisfy himself that the Government are fully discharging the obligations they have undertaken.