Increase of Petroleum Revenue Tax

Part of Orders of the Day — FINANCE (No. 2) BILL – in the House of Commons at 9:15 pm on 4th June 1980.

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Photo of Mr John Garrett Mr John Garrett , Norwich South 9:15 pm, 4th June 1980

I shall give way in a moment. I shall choose when to give way.

The Norwegians, whose oil tax regime is more comparable with ours, have intensified their drive to " Norwegianise " the oil industry by requiring a 50 per cent. stake for Statoil, the State oil company, in new licence allocations and by introducing an excess profits tax which raises its take from 77 per cent. to 85 per cent. The oil policy White Paper produced by the Norwegian Government proposes increasingly to relegate the oil companies to paid consultants, with little or no influence over how new fields should be exploited. When the Norwegians are increasing their national stake in oil, we are reducing ours. If plucky little Norway can say " boo " to the oil companies, why cannot we?

Norway takes a much firmer line towards the oil companies than we do, as can be seen from a lecture in Edinburgh last month by Dr. Jans Evensen, former chairman of the Norwegian Petroleum Council. He said: The oil business is becoming too important to leave it in the hands of the oil companies&the traditional way of granting offshore concessions to private companies should give way, at least in part, to a system in which the government retains ownership of both the seabed and the oil flowing from it&The self-evident starting point of Norwegian oil policy was that the oil on the Continental Shelf belonged to society as a whole. No tax or licence fee, for example, could cope with the enormous windfall profits that were being earned as a result of the recent oil crisis. In his view, therefore, it was time that the Norwegian Government considered introducing service contracts for offshore oil production as other oil producing countries had done.

This is a question that we must ask ourselves. Can any form of taxation adequately secure the community interest, and should we not simply move to a situation in which the companies simply receive a fee for producing oil?

In the next round of licensing the companies will apparently be required to make a down payment of £4 million for 20 or so of the blocks on offer. By contrast, the recent auction of exploration tracts in Alaska produced $1 billion for the Government of Alaska, with some companies offering the State up to 90 per cent. of the profits in order to get the blocks.

The Bow Group produced a pamphlet on the issue which called our system a " give-away " and showed that the Government could collect up to £3 billion from an auction. I quote the Bow Group, a body with which I have absolutely no connection: Even if the Government fears that an oil licence auction might give an advantage to foreign multinationals, it might at least consider a far higher charge for blocks since this again is common practice overseas.