The Government of Newfoundland and Labrador has signed a framework agreement with Equinor and BP aimed at advancing the long-delayed offshore oil development Bay du Nord.
Officials said the C$14 billion (about US$10.2 billion) agreement could also allow the province to acquire up to a 10% equity stake in the project and secure as much as C$6.4 billion in direct provincial revenue during the first phase of development.
If completed, Bay du Nord would become the province’s first new standalone offshore oil and gas project since Hebron, and the first to be developed outside Canada’s exclusive economic zone (EEZ).
A final investment decision is planned for next year, with first oil targeted for 2031.
Separately, the federal government has agreed to cover certain project charges that may fall under United Nations conventions, a move that has drawn criticism from environmental groups who argue taxpayers should not subsidize oil companies. The question of who pays Bay du Nord’s obligations under the UN Convention on the Law of the Sea (UNCLOS) has followed the project for years. Newfoundland and Labrador has maintained that potential costs—reported to be as high as $1 billion—should be borne by Canada.
Under UNCLOS, payments to the International Seabed Authority are required for resource development beyond a country’s EEZ, which extends roughly 370 km from the coastline. Annual payments begin after the first five years of production.
Canada’s federal fisheries minister, Joanne Thompson, said that if the fees reach $1 billion, “the federal government commits to it.” In response, Julia Levin, deputy director of Environmental Defence, warned that paying UNCLOS fees for Bay du Nord would conflict with Canada’s pledge to end oil and gas subsidies, arguing that using public funds to boost oil-company profits during a cost-of-living crisis is not in Canadians’ interests.
