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Newfoundland Premier Calls for 10 Per Cent Equity Stake in Energy Projects

Posted on: Tuesday, 11 September 2007, 12:00 CDT

ST. JOHN'S, N.L. (CP) - Newfoundland and Labrador will seek a 10 per cent ownership stake in all future oil and gas projects, Premier Danny Williams announced Tuesday as he unveiled the province's first long-term energy plan.

The ambitious 35-year plan, rolled out less than a week before Williams is expected to call a provincial election for Oct. 9, also commits the province to building a power transmission link between Newfoundland and Labrador, and establishing a so-called "super royalty rate" for offshore natural gas projects.

The new royalty system will allow province to charge a rate of up to 50 per cent after a project hits payout.

As for the new equity demand, it came three weeks after Williams stunned his critics by agreeing to invest $110 million to secure a 4.9 per cent ownership stake in the proposed Hebron offshore oil project.

Hebron, located 350 kilometres southeast of St. John's, contains an estimated 731 million barrels of recoverable oil. The oilfield could be more valuable to Newfoundland than its three current offshore oil operations combined, according to some estimates.

Newfoundland isn't the first province to invest in energy megaprojects. The Ontario government, for example, invested in energy giant Suncor before divesting in 1993. As well, Nova Scotia once owned a small percentage of the Sable Energy Offshore Project.

The new energy plan has been on the drawing board in one form or another since former premier Brian Tobin announced a sweeping energy review in 1998.

Source: Canadian Press

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