Newspaper article The Canadian Press

Newfoundland and Labrador Premier Talks Up Statoil Term Sheet, Royalty Revamp

Newspaper article The Canadian Press

Newfoundland and Labrador Premier Talks Up Statoil Term Sheet, Royalty Revamp

Article excerpt

Regime to speed up offshore oil development

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ST. JOHN'S, N.L. - Premier Paul Davis made waves Tuesday with talk of a term sheet "in coming weeks" for the next big oil project off Newfoundland and a new royalty regime to speed offshore development.

"'We can't say there will be a term sheet until there is one but we're very confident in the process," Davis said of negotiations with Statoil ASA of Norway to develop its Bay du Nord prospect.

Hopes for the province's economically vital offshore sector are pinned on exploration and oil production in the Flemish Pass.

That's where Statoil announced its Bay du Nord find, the largest global discovery in 2013, in 1,100 metres of water about 500 kilometres east of St. John's. Early estimates suggest it contains up to 600 million barrels of recoverable light crude.

If developed, it would open up a vast new offshore region for the province as production from existing sites wanes.

A spokesman for Statoil was not immediately available to comment.

Davis raised the prospect of a term sheet, the next step in a long development process expected to take at least four more years, as he opened the Newfoundland and Labrador Oil and Gas Industries Association conference.

With a provincial election looming in November, Davis told reporters he won't rush negotiations to score political points. His Progressive Conservative government has trailed the Opposition Liberals in successive polls and has lost seven straight byelections.

"We're simply not going to do a deal or an agreement unless we know that it's the right deal for the province."

Davis said an equity stake is part of those talks as it was for the Hebron project. First oil from Hebron is expected in 2017.

"It's important for us to have as much of a partnership as possible."

Jez Averty, Statoil's senior vice-president of exploration in North America, is expected to update the conference on Wednesday before speaking to reporters. …

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