Previous SectionIndexHome Page

Mr. Michael Jack (Fylde): The Minister mentioned security. Can he tell the House the risk factors used to determine whether a supply of energy can be deemed to be secure?

Mr. Wilson: The PIU report dealt with that issue thoroughly. It came to the overall conclusion that the anticipated sources of imports—especially of gas—have been reliable and consistent respecters of contractual obligations, whatever their difficulties in the past. The report suggested no reason to think that that would change in the future. However, vigilance is constantly required, and the risk assessments that the right hon. Gentleman mentioned are part of that. Work continues, not least by the Foreign Office, on such assessment. Such work, and the past record of reliability of supply, has contributed to the PIU's conclusion that there are no grounds on which to fear a crisis in the energy supply in the UK once we become net importers of gas—which will probably happen by 2005.

Jon Trickett (Hemsworth): I welcome this debate and the strategic context that the Minister is laying out. However, supplies of gas will become increasingly stretched in the next few decades. The EU intends to invest some 60 billion euros in gas pipelines from the east—from Russia and Iran. Will not those pipelines become increasingly vulnerable to terrorists or geological problems and will not that pose severe security risks in the medium term, if we become over-dependent on gas?

Mr. Wilson: If over-dependence on gas is considered to be a problem, it is a result of what has happened in the past 20 years rather than something that might or might not happen in the future. On present trends, we are projected by 2020 to be 70 per cent. dependent on gas for our energy needs, 90 per cent. of which would be imported. That reinforces the point about the need for vigilance, which formed part of the consultation. The PIU looked closely at the issue, including the past performance of those countries likely to export their gas to us, which include Norway, Russia, Algeria and those in the Caspian area. The report concluded that a crisis in supply was not likely. However, things can change, and common sense

20 Jun 2002 : Column 439

suggests that we should seek a balance between dependence on imported sources and the maximisation of indigenous sources of energy.

The point about dependence on imports was reinforced last week when Centrica signed a major new deal for the additional import of 5 billion cu m of gas a year into the UK from Norway. Such arrangements are already being entered into in anticipation of the continuing decline in our indigenous gas supplies. The PIU report said, in short, that that was not a problem and I acknowledge that. The issue should form an important part of the consultation, but I stress that we should be ever vigilant even if we may be reasonably optimistic on the basis of experience.

Mr. Peter Duncan (Galloway and Upper Nithsdale): The Minister mentioned the maximisation of our indigenous resources. What part was played in that strategy by the 10 per cent. additional levy on North sea oil and gas reserves?

Mr. Wilson: I can give the hon. Gentleman the good news that it has been confirmed today that the Buzzard field that has been discovered in the North sea will produce 1 billion barrels of oil, making it the biggest discovery there for 25 years. With such positive news on the North sea, on the basis of exploration and investment, I have every confidence that the remaining reserves in the North sea will be developed. We have discussed before and we can discuss again the changes in the Budget, but they are a package that also encourages investment. That is critical to the Government's fallow fields priority, which is to get fields such as Buzzard into production when there are identified reserves that have not been developed by the current licence holders.

I fully recognise the concerns of the industry, and I am working with it to address them. We should also recognise that there are incentives to investment, and we have an interest in working together to make sure that that potential is maximised.

Dr. Stephen Ladyman (South Thanet): My hon. Friend keeps saying that security of supply requires vigilance, but he sets out as a matter of fact what we all know—we will be 80 per cent. dependent on imported fuel by 2020. Vigilance is what one needs when one thinks that everything is all right but one is keeping an eye open in case circumstances change. When he sets out the fact that a problem exists, and we know that it is happening, surely that requires action to reduce our dependency on imported gas.

Mr. Wilson: With respect, that is exactly what the energy review is all about. Many other aspects of the energy review recommend action, and the Government are taking those recommendations, for example, on renewables and on other sources of energy supply.

I am merely setting out three facts. First, on current projections, we would be 70 per cent. dependent on gas as a result of what has happened in the past, 90 per cent. of which would be imported. Secondly, the PIU report says that that is not a particular problem because of the record on which suppliers would be depending. Thirdly, I do not take that as a definitive last word on the subject,

20 Jun 2002 : Column 440

and it is therefore part of the consultation. That is a logical progression of statements, which does not imply complacency on the issue of sources of gas.

Paddy Tipping (Sherwood) rose

Bob Spink (Castle Point) rose

Mr. Wilson: I shall make a little more progress, and I shall then be delighted to take more interventions.

In general, we continue to monitor closely security of supply, and we will shortly publish the first report of the joint monitoring group that we set up with the Office of Gas and Electricity Markets. On this, of course, as on other issues, there are different points of view. Some, as we have heard already in this debate, have said that the PIU was too lax on the security issue, and concerns have been expressed inside and outside the House that the market will not deliver and that the Government therefore need to intervene. I emphasise again that we need to understand why those fears persist. Our work leading to the White Paper will help to address those and other security issues.

Paddy Tipping: The very valuable point was made a moment ago that we need a balanced energy policy, and I welcome that. I contrast that with the view of the PIU report that 70 per cent. of our energy supply should be dependent on gas, 90 per cent. of which would be imported, by 2020. That is not a balanced energy policy; it is the road to disaster.

Mr. Wilson: In fairness to the PIU, it did not say that we should be in that position. It said that, on the basis of current trends and the infrastructure that is in place now, that is where we would be. If other recommendations of the PIU report are implemented, however, as we intend, we will not be 70 per cent. dependent on gas. It is a valid point that, in assessing the extent to which we should be dependent on gas, we should also take account of the extent to which that would be imported gas.

Dr. Vincent Cable (Twickenham): Will the Minister acknowledge that all three of the major disruptions of energy supply in the last three decades have come from within this country, not from overseas? I refer to major industrial action in 1974 and 1986 and the impact of British road hauliers and British farmers in 2000.

Mr. Wilson: The hon. Gentleman makes a perfectly valid point. Again, I am merely telling the House the view of the PIU report, which, clearly, has drawn heavily on past experience and does not make lightly the statement that the anticipated sources of gas in the future have been reliable suppliers of gas in the past.

Bob Spink rose

Mr. Wilson: That is a statement of fact, and it is part of the mix of consultation that is now taking place.

Mr. Dennis Skinner (Bolsover): This is almost like yesteryear. I am listening to speeches from my hon. Friend about the PIU and the problems in the energy industry. We used to say all that in the 1980s, when we

20 Jun 2002 : Column 441

told the Tory Government that, if that happened, it would be dangerous in terms of supplies, which would run out. Everybody said that we were living in cloud cuckoo land and that the pits did not matter. Of course, they went ahead and closed the pits. In 1984, there were about 170 pits, and now there are probably about 14.

The situation would be even more dire if we lost those 14 pits. Under private enterprise, the danger of losing those pits is much starker than it would be if we took them back into public ownership. We could get them for a song.

Mr. Wilson: It is always a pleasure to listen to a prophet whose time has come. My hon. Friend is absolutely right, however, as we all were. We said that the dash for gas was bonkers, and it has left us in a situation in which, on current trends, we would be 70 per cent. dependent on gas, 90 per cent. of it imported, by 2020. That is a result of the dash for gas over the past 20 years. My hon. Friend will join me in the satisfaction that, as we are a Labour Government, we are not dashing blindly into the future but carrying out a major energy review that will inform subsequent policy. That will protect us against over-dependence on a single source of energy.

In the context of what my hon. Friend said about coal, I was delighted last week at the Council of Energy Ministers in Luxembourg to be able to finalise the package of measures to support the coal industry. That package includes the flexibility, should the Government choose to use it, to have a scheme based on investment in the deep-mine coal industry. We have argued for and achieved that in the new package, and I am sure that my hon. Friend and others who have a commitment to the coal-mining communities will join me in welcoming it.

Next Section

IndexHome Page