Security of Supply Agreement

Part of Orders of the Day — Oil and Pipelines Bill – in the House of Commons at 7:45 pm on 15th July 1985.

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Photo of Mr Bruce Millan Mr Bruce Millan , Glasgow Govan 7:45 pm, 15th July 1985

I shall be brief and will not, therefore, answer the points that were made by the hon. Member for Enfield, Southgate (Mr. Portillo), except to comment that I do not accept his account of what occurred either from 1974 to 1979 or for the period since 1979.

I support the new clause, which was moved comprehensively by my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands). The security of supplies was the major point raised on Second Reading, when the Minister's answers were highly unsatisfactory. Nothing that has happened since then, in Committee and elsewhere, has persuaded me to change my view.

I will not go over the whole question of security of supplies and what might happen when the agreements under the International Energy Agency and Common Market are activated or what might happen on the activation of participation agreements. That is to be done with such a period of notice that, in terms of meeting a crisis—whether the crisis is beyond or below the trigger point of 7 per cent.—the whole process of reactivating participation agreements is of no relevance.

On Second Reading the Minister described the informal assurances given to the Government by the oil companies. Therefore, he must be embarrassed that the details of at least one of the informal assurances appeared in the Financial Times this morning. On Second Reading he said that he could not tell us any more than he had about the arrangements—and that was precious little—because the details were confidential. They were not sufficiently confidential to prevent them from appearing in today's Financial Times. I do not know how that happened, but I am delighted that it did. At least we now have information about those informal assurances.

8 pm

We are entitled to answers to a number of questions about the report in the Financial Times. Is it accurate? Does it give an accurate account of the letter from BP dated November 1983? As 20 months have passed, is that letter still operative? Is it written in similar terms to letters from other oil companies, or is it a one-off letter? If there are other letters—we must assume that there are, and that they are the substance of the informal assurances received by the Government—are they similar to the letter from BP?

I assume that those letters are not legally binding—they could not be informal if they were. On Second Reading and in Committee the Minister said that there were informal assurances. We are entitled to know how far those assurances are binding in the event of a crisis. Why should there not be legally binding agreements for the oil companies, given the circumstances of our North sea oil production? Why should we rely on informal assurances? If the companies are willing to give informal assurances, they can have no objection to having provisions written into legislation.

I shall listen carefully to the Minister's answers to those questions. However, unless there is a legally binding agreement the protection of our oil supplies will be deficient and defective. We must have legislation to deal with that, which is why we have tabled the new clause.

I fully support the new clause, including subsection 2(b) on prices. It is an important part of the new clause. However, if the Government said they were interested in security of supply but that it was not realistic to write a price ruling into legislation that would be fair enough. We could draft another new clause to accommodate that. What is essential is that there should be security of supply and that the Government have legally effective powers to ensure that in times of crisis. Indeed, the ordinary member of the public would find it incomprehensible that, despite our excessive production in the North sea, over our national needs, there should be a shortage in a time of crisis and no binding agreement to ensure security of supply. That would be indefensible.

As BNOC is to be abolished, something must be written into legislation to protect our supplies, and the new clause seeks to do that. If the drafting is not quite right, and if there was an objection to the provision on prices—although I would not necessarily accept the validity of that objection—it would be possible to write something into the legislation in another place to ensure security of supplies. I strongly support the new clause.