(In U.S. dollars)
By Jeffrey Jones
CALGARY, Alberta, Sept 27 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
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.