The offshore accords and Hibernia's impact on the Newfoundland treasury

The provincial governments of Newfoundland and Nova Scotia have each signed an accord with the government of Canada to manage and share revenues from the development of their respective offshore oil and gas fields. Negotiated provisions for offsetting equalization payments were an important component of each of these accords. The potential effectiveness of these provisions in sheltering offshore oil revenues derived from the Hibernia project under various oil price scenarios is reviewed. Both mathematical and simulation analyses demonstrate that the provisions negotiated by Nova Scotia shelter significantly more revenue than those by Newfoundland. Recommendations for future negotiating positions are presented. 4 refs., 3 tabs