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systems to issue licenses for the right to exploit petroleum
resources.
In considering North Sea licenses Exxon received and under
which it operated in the North Sea, respondent’s experts fail to
recognize and to give proper weight to the significant
uncertainties, risks, and investment commitments associated with
oil and gas exploration and production in the North Sea that, at
the time the licenses were issued to Exxon, were associated with
the licenses -- risks that insufficient oil and gas deposits in
the North Sea would be found, that petroleum resources that might
be discovered would not be commercially recoverable, and that the
large investments required to explore for oil and gas and to
operate in the North Sea would be lost.
Respondent’s experts speculate that in light of increased
oil prices in the late 1970's and early 1980's, the United
Kingdom could have set the license fees higher and obtained
higher revenues under the North Sea licenses. That, however, is
not the proper inquiry. We are not particularly concerned with
speculation, about whether in retrospect the United Kingdom
extracted all the revenues it could have from oil companies under
the licenses. Rather, as Exxon’s witnesses emphasize, the proper
focus is whether PRT was imposed and paid “in exchange for” North
Sea license rights. This is the focus of the regulations under
section 901 and that focus is to be maintained here. See
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