The international oil industry is about to strike one of the biggest bonanzas in its gold-plated history, right in our own backyard.
Hidden beneath the waters of the North Sea, to the cast of the Shetlands, lies some £75,000 million worth of oil. If the international oil monopolies get their way, most of this vast sum—twice Britain's national income-will pour into their hands as undiluted profit over the next 25 years.
GREAT GIVEAWAY
The search for North Sea oil and gas reserves began in 1964 Since there was little firm evidence that commercially viable sources of oil or gas actually existed, companies were offered rights over large 'blocks' of the sea-bed (about 100 square miles) for six years at the bargain price of £6250. After this period is up, they can opt to retain rights over up to one half of the original area for 40 years at a rent that starts at £10,000 a year and rises to a maximum of E72,500, Royalties of 12% per cent of the value of any oil or gas produced are also payable to the GovernThen, in 1970, oil was struck.
The definite existence of lucrative reserves of oil and gas made it a whole new game as far as capitalism was concerned: North Sea exploration was a serious business proposition, The Tory Government decided to test the new commercial climate by offering licences for 15 blocks of North Sea territory by competitive bid, as well as other blocks on the previous terms The competitive bids brought in combined offers of as much as £37 million for the 15 blocks. But, despite this fact, the remaining 98 blocks were virtually given away at the old price of £6,250 cach, The Government thus presented the oil companies with vast North Sea oil rights: for some £250 million less than the companies themselves were prepared to pay!
BIG BONUS
But the really big bonus to the North Sea oil operators has come from a different source the rise in world oil prices.
Take, for example, British Petrolcum's Forties Field-one of the major finds in the North Sea. This is centred in a block in which Bl' acquired rights for just 06,250 and on which they will pay an annual rental of no more than E72,500.
This is just pocket money compared with the moncy which Bl has put into exploring the block and opening up the field for production: some £470 million.
But even this pales it comparison with the potential pay off. The Forties Field is estimated to contain about 2000 million barrels of oil At the market prices prevailine when oil was first struck in the North Sea. this would be worth some 21,000 mulion pounds or just over twice BP's investment, With production at the peak level of 400,000 barrels a day, BP could have expected to make pre-tax profits of about £50 million a year-a healthy return, by any standard, of 102 on capital invested.
But all that has now changed, At today's world prices the oil in Forties Field is worth more tan 26000 million-over twelve timer BP's investment, and annual pre-tax profits should run well ahove 1350 million a year-a phenomenal return of 75% on capital invested!
TAX LOOPHOLES
Of course, these are pre-tax profits. But here's the catch. First, almost all the capital costs involved in exploring and opening up production can be deducted from the first year's profits. As a result, the taxpayer will end up subsidising these moneyspinning operations of the oil monopolies by up to 50% (more than E1,000 million).
Even then, the taxman may not be allowed to bite. The ost companles benefit from a wide range of penerous tax allowances that make them virtually immune to taxation.
First of all, all the payments which they make to the producing states (and which are regularly cited as grounds for swinging increases in retail prices of petrol and oil are tax deductible, Most multi-national companies take advantage of this fact by adjusting the internal woman was ne cares so that the hranches in Western Europe and North America show no more profit than they pay in taxes and royalties to the ou producing states, thus neutralising any liability to tax.
Moreover, the multi-national gants are allowed to charge capital expenses they make in any part of the world against their tax lisbilities in another.
companies in a highly privileged position. Over the past five years. despite their gigantic profits, the top oil companies operating in Britain have paid less than t500,000 in corporation tax, More than thatthey have actually had the cheek to claim £1500 million in tax losser (tax allowances greater than their lisbilities to pay tax), which will be set against future earnings before any tux becomer ate!
TAMING THE MONSTERS Labour Goverament is setting our to tame. But their proposals for dealing with the ou monopolies plundering operations in the North Sea are not up to the job. discussion. Seturday 23 March, Poly rechnic of Central London, 115 New Caver dish Street, from 10.30 to 6.30 Details cio BSSHS, B Poland Stroer.
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NOTTINGHAM RED CIRCLES: Widefarcirg weins if discessions bosed on che platter. monopoly.
All these loopholes have put the These are the monsters that the through All they plan to do is close some of the tax loupholes (as did the Tories) and set up a public company to buy and sall the oil produced from (this was something which even the the North Sea. There is also talk of acquiring a majority share in the North Sea oil producing operations.
Such measures are totally inadequ- an effective war against a Governate. Even the patching up of the tax loopholes will not stop the oil companies raking in thousands of millions of pounds in profits from concessions shortages in this country the Tory that were given to them on a silver As for the establishment of a state- routing oil that had heen earntarked run company to buy and sell oil. what effect can this have as long as the producing, refining and distribution operations remain in the hands of the multi-national giants? Such a company would buy oil from the monopolies in order to sell it back to them apain, and would soon find itself at the mercy of these preat multinational powers.
Here is the central question: how does Labour propose to break the power of the great monopolies?
Witbout doing this none of even its limited policies can succeed.
Acquiring a majority share in the Production operation is useless. BP nas long had a decisive slice of its shares in Government hands, but it works just like every other oil The question is not in whose bank vault the share certificates are deposited, or into whose account the dividends une paid, but who controls the company, and how does it operate: does it work according to the capitalist laws of the market, or doca it operate in the interests of society as part of a planned, socialist cconomy? BREAK MONOPOLY POWER The ability of the oil monopolies to force Governments into line is ment undeniable. Recently the Japanese Government tried, for several months. to resist the oil companies demand for big price rites, But just last week, faced with all sorts of threab including the cutting off of oil supplies altogether), they were forced to give way and allow the increases The oil companies hold a virtually complete monopoly of intormation on what is going on in the industry House of Commons all party Public Accounts Committee felt obliged to complain about) and can easily wage ment that is left blundering around in the dark During last year's supposed oil Government tried to publicly take the oil companies to task for reby the Arab states for Britain. But, faced with a flood of facts from the companies and no means of checking them, the Government was forced to make a humiliating backdown.
No policy designed to stop the profiteering of the oil monopolies and the plundering of our naturul resources, no attempe to estahlish a rational, planned development of energy sources, can he carried out until the power of the big international companies is broken.
This can only be done by opening the books of the entire oil industry to thorought and regulur inspection by elected workers committees, and the nationalisation of the big British-based monopolies and the British assets of the multi-mational giants operating in this country.
But such measures cannot be carried through by the moral force' of the Goveroment, or by the capitalist stace machine. Only the mabilised power of the trade union movement can force open the oil companies books, secure the cooperation of sufficient skilled staff to ensure the running of industry in the fuce of sabotage, and police the industry to prevent wrecking operations by the manageThis is the only way in which the vast benefits of North Sea oil and gas can he made in serve the interests of society as a whole, and not the profit seeking of the international oil monopolies.
RAY ALEXANDER ORGANISED BY International
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