Oil and Gas (Depletion Policy)

Oral Answers to Questions — Energy – in the House of Commons at 12:00 am on 11th February 1980.

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Photo of Peter Viggers Peter Viggers , Gosport 12:00 am, 11th February 1980

asked the Secretary of State for Energy if he will make a statement on the Government's depletion policy for indigenous oil and gas.

Photo of Mr John Hannam Mr John Hannam , Exeter

asked the Secretary of State for Energy when he intends to make a statement on the Government's oil depletion policy.

Photo of Mr Hamish Gray Mr Hamish Gray , Ross and Cromarty

I refer my hon. Friends to my reply of 26 November to my hon. Friend the Member for Lincoln (Mr. Carlisle) and the hon. Member for Dundee, East (Mr. Wilson).

Photo of Peter Viggers Peter Viggers , Gosport

Does my hon. Friend accept that it is the Government's duty to lay down guidelines on the rate at which oil and gas should be consumed, in order to ensure that there are adequate supplies for future generations, and that a good starting point for such guidelines would be net self-sufficiency—in other words, not using more oil and gas than is needed for this country's own needs?

Photo of Mr Hamish Gray Mr Hamish Gray , Ross and Cromarty

My hon. Friend is correct. It will be the Government's intention to try to extend the period of self-sufficiency as far forward as possible. We expect to reach the level of net self-sufficiency in the latter part of this year, and in formulating our policy for depletion in the future we shall take account of my hon. Friend's remarks. It will also be necessary to take other relevant factors into consideration.

Photo of Mr John Hannam Mr John Hannam , Exeter

Does my hon. Friend agree that this target of self-sufficiency is proving illusive? Is there not, therefore, a need to maximise exploration activities in the North Sea? How does the seventh licensing round fit into this strategy?

Photo of Mr Hamish Gray Mr Hamish Gray , Ross and Cromarty

I accept that the seventh licensing round is not, perhaps, as large as the industry would have liked, but, taken with the increase in world oil prices, which has made existing acreage still very attractive, we believe that there is considerable incentive for the industry to explore to the full.

Photo of Mr Dick Douglas Mr Dick Douglas , Dunfermline

Is it the Minister's intention to confirm that what have been loosely called the Varley assurances are to be reneged on?

Photo of Mr Hamish Gray Mr Hamish Gray , Ross and Cromarty

The Varley assurances were given in good faith and the present Government will continue to honourthem, but we must bear in mind that in the changing situation to which the oil industry is constantly subject we must review the position from time to time.

Photo of Sir Peter Emery Sir Peter Emery , Honiton

Will my hon. Friend make certain that, whilst listening to the voices of conservationists, he does not adopt a policy that will preclude further extensive exploration, because it must be realised that companies which put large sums of money into exploration wish to obtain a reasonable return from the gas or oil that they find?

Photo of Mr Hamish Gray Mr Hamish Gray , Ross and Cromarty

I can accept what my hon. points out. We have frequent consultations within the industry, and as a result of these consultations we shall devise a policy that will be beneficial to the nation and also give fair opportunity to those who invest money in our continental shelf.

Photo of Mr Timothy Renton Mr Timothy Renton , Mid Sussex

May I suggest that when the Secretary of State offers shares in the British National Oil Corporation to employees of the BNOC and the British public he should make clear the policy on depletion, as that will be of extreme interest to anyone wishing to invest in BNOC? In those circumstances, would it not be wiser to be a little less coy now and tell us more about the Government's depletion policy?

Photo of Mr Hamish Gray Mr Hamish Gray , Ross and Cromarty

I think that my hon. Friend would agree that the term "depletion policy" is somewhat misleading, and that what we are really talking about is "resource management". Bearing that in mind, we shall take account of what my hon. Friend has said. In due course my right hon. Friend will make a statement to the House, in which he will clarify the position about BNOC and the future rate at which we shall deplete our resources.