Exxon, Murphy plan to sue Canada under NAFTA
(In U.S. dollars)
CALGARY, Alberta, Sept 27 (Reuters) - Exxon Mobil Corp (XOM.N) and Murphy Oil Corp (MUR.N) intend to sue Canada for at least $50 million, claiming they have been forced into spending more on research in Newfoundland in contravention of previous agreements for offshore oil projects, court documents say.
The U.S. oil companies, partners in the Hibernia and Terra Nova oil developments off the Newfoundland coast, plan to sue under the terms of the North American Free Trade Agreement, according to documents that they filed last month.
The companies claim the Canada-Newfoundland and Labrador Offshore Petroleum Board, regulator of offshore projects, adopted guidelines in 2004 that require investors to spend millions of dollars on research and development within the Atlantic province. If the money is not spent, it must be paid into a fund.
That contravenes a Canadian commitment when NAFTA was enacted in 1994 in which it agreed not to impose any new local spending requirements on companies developing offshore energy projects, according to the notice of claim.
The claims have not been proven in court.
"This is an avenue open to the company, and the company is using it to seek the financial protection that NAFTA provides," Margot Bruce-O'Connell, an Exxon Mobil spokeswoman in St. John's, Newfoundland, said on Thursday.
Murphy officials were not immediately available for comment.
Exxon Mobil of Irving, Texas, is seeking damages "in excess of $40 million" and El Dorado, Arkansas-based Murphy is seeking more than $10 million.
The claims follow a Newfoundland and Labrador Supreme Court Case in 2005, in which the Hibernia and Terra Nova operators argued the board did not have the authority to impose the research spending guidelines.
The court ruled the board in fact had the power. An appeal is pending, according to the claims under NAFTA.
Exxon Mobil has a 33 percent stake in the 200,000 barrel a day Hibernia project and a 22 percent interest in Terra Nova, which produces about 150,000 barrels a day. Murphy has 6.5 percent of Hibernia and 12 percent of Terra Nova.
Newfoundland, and its outspoken premier, Danny Williams, have also recently come under fire from some quarters of the oil industry for demanding a share of new offshore projects.
The province said early this month it plans to take 10 percent interests in future oil and gas projects as part of a new energy strategy.
The initiative followed an agreement this summer with Chevron Corp (CVX.N) and its partners to take a 4.9 percent stake in the proposed Hebron development.
- Tweet this
- Share this
- Digg this
- Malaysian plane presumed crashed; questions over false IDs |
- CORRECTED-UPDATE 4-Malaysia Airlines plane crashes in South China Sea with 239 people aboard - report
- CORRECTED-WRAPUP 1-Malaysia Airlines denies crash report, says plane still missing
- Warning shots fired to turn monitors back from Crimea |
- UPDATE 3-Boeing reports wing cracks on 787 Dreamliners in production