August 24, 1999
(Mines and Energy)

Oil and gas industry having positive effects on economy

Roger Grimes, Minister of Mines and Energy, said the royalty rate applicable to the Hibernia project will increase from one per cent to two per cent as of September 1, 1999. Grimes also noted that higher crude oil prices and increasing production are having positive effects on the oil and gas industry in our province.

"In addition to royalties, the province is also receiving other substantial economic and employment benefits from our petroleum industry," said Grimes. "Other projects, like Terra Nova, are going to provide the province with substantially higher royalty revenues, compared to Hibernia."

Unlike Hibernia, the Terra Nova project and future development projects will be done on a competitive basis and with no government assistance. Grimes added that government is committed to ensuring a competitive environment for the oil and gas industry, with balanced benefits for the province.

Paul Dicks, Minister of Finance, has said that although the province may receive more than the $10-12 million originally forecasted for this year from offshore royalties, that does not mean the province will have more money to spend. "Although we would be receiving additional royalties, due to the equalization formula, we will not have additional money to spend," noted Dicks.

"The climate of the oil and gas industry is very positive right now," added Grimes. "Crude oil prices have increased, production has been increasing at Hibernia and the project is just the foundation of what will become a very large, significant industry for Newfoundland and Labrador."

Media contact: Carl Cooper, Communications, (709) 729-4890.

1999 08 24         3:00 p.m.