Talks on Hebron Oil Development Underway
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When Newfoundland and Labrador Premier Danny Williams demanded a 4.9% equity stake in the long shelved Hebron oil field off the province’s coast it resulted in an end to negotiations. The companies involved walked away from the table, closed up offices in St. John’s and announced that no further discussions were taking place. Williams wanted too much they claimed.
At the time the industry blamed the Premier for wanting too much and one national paper compared him to South American dictator Hugo Chavez. At home he was hailed as a hero for standing up to big oil and ensuring that a fair return on the resource came to the province or as he said at the time, “the oil can stay in the ground.”
The Hebron find was uncovered over 20 years ago and since that time the companies involved have sat on the field waiting for oil prices to rise. In the mean time, the people of the province have struggled through hard economic times that included the collapse of their main industry, fishing and the highest unemployment in the Country.
A few weeks ago Premier Williams announced that his government’s long awaited provincial energy plan would be released prior to the election in October. In making that announcement Williams also let it be known that any oil projects developed after its release would be subject to a higher rate of return than the previously suggested 5%. With all signs showing the current government poised to win a landslide majority in the next election it seems the oil companies involved may have blinked in the showdown over Hebron.
During an investment conference held by petroleum producers, Petro-Canada executive vice-president Peter Kallos said, “We are hoping Hebron will go forward. We are in the middle of restarting those discussions.”
According to a report in the Financial Post, Mr. Kallos would not say whether the partners want to lock up an agreement before the energy plan becomes effective.
“The authorities in Newfoundland are clearly hoping that this energy plan will make things happen. We are hoping that things will happen. I am optimistic,” Mr. Kallos said.
“I think it’s worth getting a deal and, as with any deal, it will be done when the time is right.”
“The co-venturers have always remained open to the possibility that the project could proceed at a future date, but there are no negotiations taking place,” said Chevron spokesman Dave Pommer.
The group has seen little good news in the past year, as other major oil-and-gas developments worth billions remained on hold over policy uncertainty.
@ June 19, 2007