WRITTEN QUESTION E-2126/99

by Nelly Maes (Verts/ALE) and Bart Staes (Verts/ALE) to the Commission

(24 November 1999)

Subject: Financial aid to the European oil industry

There is considerable movement in the oil sector: large companies are merging, OPEC meetings can lead to a rise in the price of crude oil and there are regular press reports of new oil fields. The crisis atmosphere of 1973 seems definitely to be a thing of the past.

In the last two decades the Commission's energy policy has been increasingly concentrated on three aspects:

(a) adequate energy supplies;

(b) environmental friendliness, and

(c) consolidating a competitive position.

1. Following the 1973 oil crisis did the Commission draw up financial support measures for the European oil industry?

2. If not, has the Commission given the sector support in any other form? What initiatives were involved?

3. If the Commission did draw up support measures, what financial aid has been given to the European oil industry since 1973 (broken down by programmes and companies)?

4. What are the Commission's reasons for such financial aid to the European oil industry?

5. Does the Commission believe that financial aid to the oil industry is compatible with measures to prevent CO2 emissions?

Answer given by Mrs de Palacio on behalf of the Commission

(20 December 1999)

Financial assistance programmes for the hydrocarbons sector were initially established in response to the oil price shock in 1973 when the disadvantages of the Community dependence on the Middle East for 90 % its oil supply became apparent. The initial aim was to provide a financial tool to assist in the rapid development of new innovative technologies which would ensure that the North Sea could be economically developed as an oil province. The financial support provided was repayable in the event of subsequent commercial exploitation and approximately 30 % of the assistance was eventually repaid.

Since commencement in 1975 some 750 million of financial assistance, has been granted to the hydrocarbons sector on almost 1 000 individual projects for the research, development, demonstration, and dissemination of innovative technology. The most recent relevant publication Thermie Hydrocarbons, sectoral report 1995-1997 contains full details of both the Thermie programme and its predecessors is forwarded directly to the Honourable Members as well as to Parliament's Secretariat. This explains the background to the series of financial assistance programmes under which this aid has been given and provides a comprehensive description of the aims and objectives of the programme and some examples of individual projects.

These projects in the hydrocarbons sector represent a broad spread of activities, all of which aim to achieve the same broad global goal; the safe, clean, efficient and affordable exploration, production, transport and storage of hydrocarbons. Originally directed primarily towards cost reductions in order to promote indigenous production and hence security of supply for the Community, the goals have broadened, particularly since the 1990s and the general fall in oil prices, to include the promotion of greater competitivity, greater environmental protection and increased employment.

A significant part of the assistance goes directly to the oil related supply and services sector which includes a large number of small and medium enterprises and employs in the Community between 350 000 and 500 000 people.

As Europe will continue to rely heavily upon hydrocarbon fuels for energy supply in the foreseeable future the Commission does not believe that such a strategy is inconsistent with its approach to the problems of Carbon dioxide (CO2) and climate change. Indeed the most recent call for expressions of interest in June 1999 emphasised the environmental protection aspects in particular, including for example specific reference to CO2 recovery and re-injection possibilities. The development of a strong Community based industry augurs well for both the Community and further afield as technology transfer, industrial co-operation and international partnerships are actively encouraged and the use of Community best environmental practices in the upstream sector becomes more widespread.