OTTAWA (AFP) - A consortium led by Chevron yesterday reached deal with "unprecedented" benefits for Canada's Newfoundland and Labrador province to develop an offshore oil project, officials said.
"The Hebron agreement gives unprecedented local benefits in the form of equity and a new super-royalty regime," Danny Williams, the island province's premier, told reporters.
"While we have always recognized and valued the role of industry in the development of our natural resources, we have also stood firm in our conviction that we must be significant beneficiaries of these resources," he said.
Thus, "we have signed a historic MOU (memorandum of understanding) for this province which will assist Newfoundland and Labrador in achieving the economic self-reliance to which we have long aspired," he said.
The Hebron oil field, located 340 kilometers (210 miles) southeast of St. John's, Newfoundland, and discovered in 1981, holds an estimated 700 million barrels of reserves.
Talks between Chevron and the government to develop it had broken off last year, but resumed last month on the eve of a provincial election.
Newfoundland has agreed to purchase a 4.9 percent stake in the project for 110 million Canadian dollars (104 million US) and expects a return of 16 billion dollars (15 billion US) over 25 years, Williams said.
The federal government, meanwhile, would bank seven billion dollars (6.5 billion US) in royalties, he said.
If average oil prices top 50 dollars US a barrel, Newfoundland would receive additional "super-royalties" of 6.5 percent, Williams added.
"Step by step we are becoming masters of our own house," he said. "As we move forward with this negotiation, we were determined to raise the bar in terms of local benefits."
The province's industry partners in the development include Chevron, ExxonMobil, Petro Canada and Norsk Hydro.
Newfoundland's other offshore oil projects are Hibernia, White Rose and Terra Nova.