Tentative Hibernia South deal reached
ST. JOHN’S, Nfld.–A tentative agreement has been reached to develop the Hibernia South offshore oilfield that gives the Newfoundland and Labrador government an unprecedented 10 per cent equity stake in the project.
The stake would apply to 170 million of the oilfield’s estimated 223 million barrels of oil, and would cost the provincial government $30 million.
Over the life of the project, the province would generate $10 billion in revenue while Canada would earn $3.5 billion.
"This is tremendous news for the industry and the province as a whole," Premier Danny Williams told an offshore oil convention Tuesday.
"It’s just another example of how much we, as a province, contribute to Canada’s coffers and the contribution that we make to this great federation of Canada."
If finalized, the deal will also give the provincial government an escalating royalty rate that peaks at 50 per cent, depending on several factors including the price of oil payday advance loan.
In January 2007, the Newfoundland and Labrador government rejected a proposal to develop the project. At the time, the government said the proposal lacked information on a tax regime, commercial arrangements between the companies involved and any impact it could have on future natural gas development.
The development application was submitted in 2006 by the Hibernia Management and Development Corp., which includes ExxonMobil, Chevron, Petro-Canada (TSX: PCA), Norsk Hydro, Murphy Oil and Canada Hibernia Holding.
Development of Hibernia South would also help offset a decline in production from the province’s three offshore oil projects currently operational.