Syncrude Won't Accept Loss In Oil Sands Royalty Deal - Report
Dow Jones
March 12, 2008: 10:27 AM EST
OTTAWA -(Dow Jones)- Syncrude Canada Ltd. will only accept a new oil sands royalty deal with the Alberta government that "doesn't short-shrift shareholders," shareholder Imperial Oil Ltd. (IMO) said, the National Post reported Wednesday.
However, partners in the Syncrude consortium are prepared to negotiate a new agreement under Alberta's new oil and gas royalty scheme, Imperial's outgoing chief executive, Tim Hearn, told the newspaper.
"We have been very clear," Hearn was quoted as saying. "We told the government that we were prepared to change the contract to the new terms primarily on the condition that the inherent value of the contract was somehow recognized in the new arrangement."
In October, the provincial government announced it was hiking oil and gas revenues by C$1.4 billion in a bid to gain a "fair share" for Albertans, with the new terms replacing any pre-existing deals. Alberta's two oldest oil sands developers, Suncor Energy Inc. (SU) and Syncrude, already had arrangements running to 2016, and the government opened negotiations to transition them to the higher rates. Suncor reached a deal with the province in January, agreeing to pay up to 20% more starting in 2010.
Hearn said Syncrude may accept the same terms as Suncor after the loss in value has been recognized, the newspaper reported.
Syncrude is Canada's biggest oil sands producer, with a mine and upgrader near Fort McMurray in northern Alberta. Imperial has a 25% stake in the project, while majority shareholder and operator Canadian Oil Sands Trust (COS.UN.T) holds 36.74%. Other shareholders include Petro-Canada (PCZ), ConocoPhillips ( COP) and Nexen Inc. (NXY).
http://money.cnn.com/news/newsfeeds/articles/djf500/200803121027DOWJONES...
