A Collaboration with the University of Pittsburgh

Canada agrees to $235M settlement in Nova Scotia oil and gas dispute

[JURIST] Canadian government leaders reached an agreement [text, PDF; press release, PDF] with Nova Scotian officials on Sunday which requires the Canadian government to pay the province $235 million CAD for lost profits from prior government offshore oil and gas projects. In 1980, the Canadian government obtained the right [program backgrounder, PDF] to buy partial ownership in private Canadian oil and gas projects, including those off the coast of Nova Scotia. The province obtained the rights to some of the profits in 1982, and in 1986 the federal government abolished its 1980 share rights and agreed to compensate the province [agreement materials] for its lost profits. Compensation provisions remained unclear until an independent panel recently recommended [text, PDF] a payment amount and a timetable for the reparations, which the governments adopted. The Canadian government will also pay the province an estimated $633 million CAD over the next 15 years for current and future oil and gas projects. Nova Scotian Premier Rodney MacDonald said [speech text] of the agreement:

Fiscal responsibility is the cornerstone of our province and our government. Ninety-two per cent of Crown Share payments — or about $800 million — will be applied to the provincial debt. Over time, these payments will free up millions of dollars in debt servicing costs each year, money which will be invested in the priorities of Nova Scotians. [sic]
The Globe and Mail has more.

The agreement made in 1986 required the federal government to pay Nova Scotia 75 percent of the government's profits as soon as the earnings reached $200 million CAD on any eligible oil or gas operation off the Nova Scotia coast. The provincial and federal governments had disagreed on the exact terms of the payments, but profits only recently reached the required amount on the first qualifying operation, the Sable Project [official website].

About Paper Chase

Paper Chase is JURIST's real-time legal news service, powered by a team of 30 law student reporters and editors led by law professor Bernard Hibbitts at the University of Pittsburgh School of Law. As an educational service, Paper Chase is dedicated to presenting important legal news and materials rapidly, objectively and intelligibly in an accessible format.

© Copyright JURIST Legal News and Research Services, Inc., 2013.