Newfoundland premier-to-be says Ottawa should give up its Hibernia stake

ST. JOHN’S, N.L. – Ottawa should consider giving Newfoundland and Labrador its stake in the lucrative Hibernia offshore oilfield, says incoming premier Frank Coleman.

“I’d like to see the federal government give us their share,” he said Thursday in an interview. “We’re one of four provinces right now that don’t solicit help from the equalization formula.

“You know, the federal government has benefited from the industry, the investment of the people of this province. And I think it is fair for the federal government to consider giving us that share.”

The province first offered in 2010 to buy Ottawa’s 8.5 per cent stake in the oilfield about 315 kilometres southeast of St. John’s.

Ottawa took the stake and invested $431 million on top of grants and loan guarantees to keep the project alive as it teetered in the 1990s.

The federal government has since got that money back along with $1.8 billion in cumulative dividends since the field first produced oil in 1997, according to the Finance Department.

In its annual report for 2013, the Canada Development Investment Corp. said it received $142 million in Hibernia dividends last year. Canada Hibernia Holding Corp. also paid out $136 million in provincial royalties that year and $74 million in provincial and federal income taxes, says the report.

The late former finance minister Jim Flaherty said last fall he was willing to discuss selling the stake, which by some estimates is worth more than $1 billion.

Former premier Kathy Dunderdale at the time indicated the province would be interested but said: “It will be an expensive buy.”

Provincial Natural Resources Minister Derrick Dalley said Thursday that he wants to continue talks with Finance Minister Joe Oliver “as he transitions into his new role.”

“As we have stated previously, we are interested in the purchase of the federal stake in the Hibernia project,” Dalley said in an email.

“We believe that the acquisition will provide significant value to the people of Newfoundland and Labrador.”

A federal Finance Department spokeswoman said Thursday in an email that any potential sale would have to reflect market value and the risk of Ottawa’s original investment.

“The government took on significant risk in order to ensure the Hibernia project remained viable,” said Stephanie Rubec.

“Since then, we have consistently managed the investment in Hibernia in order to maximize value to all Canadians, and in accordance with best commercial practices.”

Former premier Danny Williams in 2010 first pushed efforts to buy out the federal government’s minority stake. Negotiations broke down over an undisclosed price tag.

Former Lt.-Gov. John Crosbie, who spent 17 years as a federal politician ending in 1993, devoted much of that time fighting for support for Hibernia. He has repeatedly credited former prime minister Brian Mulroney for backing a project that launched the province’s offshore oil sector and vaulted it to “have” status in the country.

Coleman, a Corner Brook-based businessman, is to be confirmed leader of the Progressive Conservative party in July and sworn in as premier soon after.

The political novice became the sole candidate for the job after one of two challengers dropped out, declaring the race “fixed” in Coleman’s favour. The other was eliminated for tweets the party said were discriminatory.