What role for the state?
As soon as the First Licensing Round had been completed, stocktaking commenced even before the fi rst offshore well was drilled. The change of Government gave an additional impetus to the review. At a meeting of the Ministerial Committee on Economic Development on 6th November 1964, when it was agreed that the licences issued by the previous Administration should not be disturbed, Mr Fred Lee, the Minister of Power, was invited to produce a paper setting out the considerations which had determined the system of licensing then in use, and to prepare proposals for allocating further licences. The Minister himself was keen to consider methods of substantially increasing the British share in new licences. It was noted that British participation in the First Round was only 30% of the total, though this rose to 42% in the area in which the greatest hopes were placed. Views were also expressed, that, because of the high risks involved, in current circumstances the nation could ill afford the necessary considerable risk capital. On the other hand the success in the Netherlands (onshore) and the eagerness of the international oil companies to invest indicated that the risks were justifi ed. In developing policy it had also to be borne in mind that the UK had a very large stake in oil production overseas. Any actions taken with respect to terms in the North Sea could have repercussions on those imposed by foreign Governments. With respect to timing it was noted that exploration was now proceeding in other parts of the North Sea outside UK jurisdiction, and there was a need to ensure that we were not placed in a disadvantageous position with respect to our European neighbours.