Mr C Rose Greenpeace Canonbury Villas London N1 2PN 7th April 1997

I refer to your company's application dated 25th of March 1997 for production licences for all tranches offered in the above round, my letter of 26th March 1997 and Ms Tripley's letter of 2nd April l997.

I am returning under separate cover the cheque which accompanied your letter of 25 March as your application was not in accordance with the requirements prescribed by paragraph 5 of Schedule 3 to the Petroleum, (Production) (Seaward Areas) Regulations 1988 (this paragraph was inserted by paragraph 7 of the Petroleum (Production) (Seaward Areas) (Amendment) Regulations 1996). In particular your application did not include any of the information referred to in the third paragraph of my letter of 26th March 1997 addressed to you and your company has not subsequently sought to remedy this defect.

Even if your company's, application had satisfied the applicable requirements the Secretary of State would not have granted you a licence for any of the blocks for the following reasons:

(a)

the purpose of the 17th round is to identify oil and gas resources in the tranches of the UKCS offered in the round with a view to their exploitation where technically possible; your organisation did not propose to carry out any activities with a view to the identification of such resources;

(b)

the purpose of the grant of a licence under the Petroleum (Production) Act 1934 is to permit the searching for and the exploitation of hydrocarbons; no licence under the provisions of that Act is required for the carrying out of the marine surveys that your organisation proposed to carry out in the work programme appended to its application,

(c)

licences can only be awarded on the basis of criteria concerning the matters set out in regulation 3(1) of the Hydrocarbons Licensing Directive Regulations 1995; that regulation would not permit the granting of a production licence to an applicant who does not propose to search and bore for and get petroleum.

Ms Tripley's letter referred to the Directive on assessment of the effects of certain public and private projects on the environment (85/337 EEC - the EIA Directive). This Directive aims to introduce "general principles for the assessment of environmental effects ... with a view to supplementing and co-ordinating development consent procedures governing public and private projects likely to have a major effect on the environment". The Government does not consider that the Directive is applicable in relation to the Secretary of State's decision in this case. Annex II of the Directive lists projects subject to its Article 4(2) and includes at 2(b) deep drillings for extractive industry, at 2(f) and (g) extraction of petroleum and natural gas and oil, and at lO(h) gas pipeline installations. Separate consents are required before a licensee can drill for or extract oil or gas under a licence and the grant of a licence is not of itself a project within the meaning of the Directive.

Terms attached to licences for all 17th Round blocks will require the licensee, before commencing any activity authorised by the licence other than seismic surveying, to have in place an oil spill contingency plan which has been approved in writing by the Secretary of State. This will identify environmental sensitivities which could be affected by a spill from a drilling rig or from a well mishap and will set out the strategies to be adopted in the event of either. A majority of blocks will also require well-specific oil spill contingency plans to be submitted as part of the well consent procedure (which applies to each well drilled) if it is proposed to drill at a time of recognised sensitivity.

Licences awarded in the 17th Round will also require environmental impact assessments as part of the consent procedure before a licensee is permitted to develop a field for production or to construct a pipeline. Both the well-specific and pre-development procedures address sensitivities in the areas likely to be affected by any adverse effects on the environment, whereas the tranches offered in the 17th Round cover many hundreds of square kilometres where neither well nor development consent may be requested and such detailed assessments may therefore not be required.

Yours sincerely