The Offshore Accords and Hibernia's Impact on the Newfoundland Treasury

The provincial governments of Newfoundland and Nova Scotia have each signed an accord with the Government of Canada to manage and share revenues from the development of their respective offhsore oil and gas fields. Negotiated provisions for offsetting equalization payments were an important component of each of these accords. This paper analyzes how effective these offset provisions might be in sheltering offshore oil revenue derived from the Hibernia project under various oil price scenarios. Both mathematical and simulation analyses demonstrate that the provisions negotiated by Nova Scotia shelter significantly more revenue than those of Newfoundland.