chapter  6
29 Pages

Further gas developments and the Frigg contracts

It had been expected that the long-term gas contracts for the Hewett, Leman, and Indefatigable fi elds would greatly facilitate agreements on other fi elds. This did not prove to be the case. While the operators of other fi elds were aware of the main features of the agreements in negotiations they tended to emphasise the special features of their own fi elds which necessitated variations from existing contracts. The result was that negotiations were prolonged. The fi elds in question included West Sole, Viking, Deborah, Dotty, Hewett North, Rough, and Ekofi sk, each of which were deemed by the operators to have their own unique characteristics deserving special consideration in contracts. Within Government, while thinking on some terms relating to gas contracts remained unchanged, variations relating to others were emerging. On pricing the cost-related approach was still stoutly defended. On utilisation the Ministry, in evidence to the Select Committee on Nationalised Industries in 1968, reiterated principles enunciated earlier in the 1967 White Paper, namely that initially there should be concentration on the premium market, and subsequently on the bulk market when prices should be lower. A controversy arose over this matter in early 1969 when the British Steel Corporation signed a large contract to purchase (imported) fuel oil. Arguments were produced that natural gas should have been used instead. Mr Mason explained to the Prime Minister that the quantities of gas required were not yet available, and that bulk fuel supply to industry did not represent the best use of North Sea gas at this stage.