Hibernia, courtesy Petro-Canada

Newfoundland and Labrador, one of Canada’s poorest provinces, will demand a minimum five percent equity stake in all future offshore oil projects and will use the money earned to build its own oil company, it learned Wednesday.

The St. John’s government had already shaken up financial terms at the offshore heavy-oil project Hebron and compelled oil companies to reconsider the posting of project teams.

Asking for 4.9 percent after the signing of a joint-operations agreement was perceived as odd by the industry, but Newfoundlanders see it as a way of compensating for petro-earnings transferred to the federal government in Ottawa.

Newspaper the Globe & Mail reported the province would arm the new company with $600 million in “borrowing power”. Natural Resources Minister Kathy Dunderdale said Newfoundland would exact the five-percent from Hibernia partners too in-line with “what is happening in many, many other parts of the world,” the newspaper quoted her saying.

“It’s unpredictable. That’s the worst thing about Hebron,” Morten Ruud of Hebron partner Hydro told OilGas 24.com affiliate Scandinavian Oil-Gas Magazine, just as news broke in 2006 that Newfoundland would upset the joint operating agreement.

“It starts to get underway, you buy seismic, drill a lot of wells, suddenly the game changes,” a normally uncomplaining Ruud said.

ws@oilgas24.com