The Hibernia Dividend Backed Annuity Agreement (the Agreement) provides for the following:
- Canada will provide a net value of $2.5 billion to Newfoundland and Labrador, through secure, long-term, predictable annual payments made by Canada Development Investment Corporation (CDEV), starting in 2019 and concluding in 2056 (a period of 38 years);
- Newfoundland and Labrador will provide $800 million to Canada, through annual payments made to CDEV starting in 2045; and,
- Canada and Newfoundland and Labrador will work together to resolve several other matters to deepen their joint management partnership of offshore oil and gas, including jointly finalizing improvements to the Accord Acts in areas of land tenure (e.g., the terms of exploration, production and discovery licences) and worker safety.
The Agreement maintains and enhances Newfoundland and Labrador’s right under the Atlantic Accord to be the principal beneficiary of the oil and gas resources off its shores, consistent with the requirement for a strong and united Canada.
The Hibernia oil field was discovered in 1979 and is located 315 kilometres east of St. John’s, NL. Construction of the Hibernia oil project began in 1990 after the federal government committed substantial financial support to secure the project’s development.
In 1993, Gulf Canada Resources Ltd. withdrew from the Hibernia oil project, putting the future of the project into question. To ensure that the Hibernia Project was able to proceed, the federal government acquired an 8.5 per cent working interest in the project through Canada Hibernia Holding Corporation (CHHC). As a participant in the Hibernia oil project, CHHC contributed $431 million as its share of pre-production investments, which was funded by the federal government.
Canada Development Investment Corporation
Canada Development Investment Corporation (CDEV) is a federal Crown corporation established in 1982, with a mandate to hold and manage in a commercial manner certain commercial interests of the federal government. CHHC, a wholly owned subsidiary of CDEV, was established in March 1993 to hold, manage, administer and operate the Government of Canada’s 8.5 per cent working interest in the Hibernia Project. It also holds, manages, administers and operates the Government of Canada’s 5.7 per cent working interest in the Hibernia South Extension Project.