OTTAWA (Dow Jones Newswires), August 18, 2008
A deal to develop the C$5 billion Hebron oil field off the east Canadian coast could be finalized this week, CBC News reported Monday.
After several setbacks, the project was revived a year ago after the Chevron Corp.-led consortium behind Hebron signed a memorandum of understanding with Newfoundland and Labrador, which expires Thursday.
"Oil industry insiders" in the province are preparing to make an announcement on Wednesday or Thursday, CBC said, citing unnamed sources.
Rumors have been circulating since June, when Chevron's Canadian arm told leaseholders of its St. John's, Newfoundland, office that it needed the space back, the report added.
With last year's agreement, the Hebron consortium ceded to provincial premier Danny Williams' demands for an equity stake and higher royalty rates, which had caused talks to falter in early 2006.
Newfoundland has a 4.9% equity stake in the development, which it bought for C$110 million. The Hebron developers will also be subject to a "super-royalty" regime, with higher rates linked to higher oil prices.
When announcing the agreement last year, Williams said Hebron would contribute C$16 billion to the provincial economy over its 25-year life, and C$7 billion for the Canadian economy.
Hebron would be Newfoundland's fourth offshore development, after Hibernia, Terra Nova and White Rose, and some estimates reckon it could produce more revenue than the current three combined.
Before Newfoundland bought its equity stake, project leader Chevron Canada Resources held 28%, ExxonMobil Corp.'s Canadian unit the majority 37.9% stake, Petro-Canada held 23.9%, and StatoilHydro ASA the remainder. Williams didn't indicate which of the project partners had to surrender parts of their share to contribute to the province's stake.
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