The Development of the U.K. National Regime for Oil and Gas, 1934-1981

Scoones, Martin Arthur (1985). The Development of the U.K. National Regime for Oil and Gas, 1934-1981. MPhil thesis The Open University.

DOI: https://doi.org/10.21954/ou.ro.000100cb

Abstract

Development of the regime is related to the bargaining relationship between the British Government and the oil companies, tracing its influence (together with domestic and international considerations) on the decision making process which shaped the regime's character from 1934 onwards, and comparing British experience with a model of the Oil Company-Government (1) relationship derived from Hossain. Both onshore in 1934, and offshore in the middle Sixties, certainty of ownership and access to the resources for exploitation, is shown to have been a precondition for investment. This was resolved in 1934 by taking these resources into Crown ownership, and in the middle Sixties through the negotiation of an internationally agreed U.K. Sector of the North Sea. Negotiations for the establishment of that Sector are considered, explaining why a Regional regime was not adopted for the North Sea. The subsequent resolution of cross boundary unitization by Britain and Norway is also considered. In the 1964 offshore regime, company possession of scarce technology is demonstrated to have secured the industry generally favourable terms (the weakness of the Government being reinforced by the rapid development policy) yet the position of British Gas as monopsony purchaser, obtained gas at well below market prices. In 1973 the Public Accounts Committee criticised the regime in its application to the then recently discovered northern oilfields. The state of development of those oilfields, and changes in the international oil industry are shown to have made these criticisms premature in 1973, though by 1975 when regime changes did occur, both those conditions had considerably matured. The bipartisan approach to policy was breached in 1975 with the formation of B.N.O.C., after which the Hossain model is inappropriate, since policy progressively diverged on ideological lines, which will be demonstrated both through the subsequent history of the Corporation, and other regime changes introduced by the Conservatives after 1979. A final conclusion observes that the Hossain model may yet have some current relevance, as a consequence of the massive investments needed to extend U.K. self sufficiency up to the next Century.

(1) Hossain, Kamal. Law and policy in petroleum development: changing relations between transnationals and governments. London, Frances Pinter, 1979.

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