WATCHING THE WORLD LABOR PARTY EYES A WIN

Britain's Labor party believes it is poised for victory in the general election that must be held within the next 2 years.

The ruling Conservatives are trailing in all opinion polls, and with the electorate blaming government for double digit inflation, high interest rates, and onset of a recession, prospects for improving the popularity of the administration do not look encouraging.

The prospect of Labor forming the next government may have stirred memories among some U.K. oil companies of the defunct British National Oil Corp. and interventionist policies of Socialist administrations in the 1970's.

A CHANGED PARTY

During the Thatcher years the Labor party has changed out of all recognition, moving from the left more toward center ground. And judging from current thinking in the party, the oil industry has little worry from a Labor election success.

Frank Doran, the Labor spokesman on oil and gas, stated quite categorically that a state oil company will not be re-created. His views on taxes might have been dictated by an oil company chairman.

Doran recently said the present emphasis of fiscal policy, which treats oil and gas simply as a source of tax revenue, will have to change as the decline in U.K. reserves accelerates. A responsible government will have to consider whether it is more appropriate to treat hydrocarbons as a vital, indigenous raw material and tailor the fiscal regime accordingly.

A flexible approach to taxation must include incentives to develop marginal fields and encourage maximum recovery of hydrocarbons from existing fields, he said. He suggested a review of tax rules to discover whether they are preventing development of otherwise viable fields.

And, echoing many oil company sentiments, he said there is a long way to go before tax problems in abandoning North Sea fields is dealt with properly.

Changes in this year's budget could encourage early abandonment of fields. That strikes at the heart of any policy that seeks to maximize recovery. This is particularly important when existing platforms are to be a vital part of the infrastructure on which the next phase of development depends.

There is more cause for industry concern over Labor's thinking on trends toward the use of gas for power generation, one of the key elements in making the industrial gas market more competitive.

A NEW REGULATOR

Doran said Labor will introduce a new form of regulator covering all of the energy industry, including downstream oil, armed with greater powers than the present regulators in the gas and electrical power industries.

While Labor will not re-create BNOC, Doran favors establishment of a "center of academic and technical excellence" on all aspects of the industry that could provide sound, independent advice to government.

As this center develops, it can be given more roles and take over management of public funds for development of new technology or services by U.K. oil or oil-related companies. Doran thinks it will provide a vital public service and be of considerable benefit to the oil industry.