* Canada increasing liability limits for offshore oil
* New limit C$1 bln, up from C$30-40 mln
* Producers now liable for environmental damages
CALGARY, Alberta, June 18 (Reuters) - The Canadian government said on Tuesday it will raise the liability for oil spill cleanups off the country's east and Arctic coasts to C$1 billion ($979 million), a more than twenty-five fold increase from its prior limit.
Joe Oliver, Canada's minister of natural resources, said oil companies operating in Canadian waters much demonstrate they have at least C$1 billion in financial capacity and ready access to at least C$100 million.
Currently liability for spills is limited to C$30 million for spills off the east coast and C$40 million for Arctic spills, though oil producers face unlimited liability if they are proven to be negligent or at fault.
The changes will also allow the government to charge for environmental damages from a spill, rather than just for clean-up costs.
"Our proposed changes will include so-called non-use value damages for example, to the environment, to be included in the calculation of an operator's liability," Oliver said. "This will provide an additional basis for government to pursue operators and to recoup financial compensation for damages to coastlines, habitats and species."
The move is the second such measure for Canadian government this month. Last week it boosted the liability for nuclear-plant operators to C$1 billion from C$75 million. ($1 = 1.0213 Canadian dollars) (Reporting by Scott Haggett; Editing by Marguerita Choy)