North Bay Project Framework Agreement. Opening of a new basin, the Flemish pass. We are ready to explore this [revenue sharing] possibility and we are ready to support this principle to encourage accommodation. The two conditions – and I have pointed out – on the basis of which Canada would be prepared to support such a principle would be: first, that any agreement drawn up should not deviate in any way from our sovereign rights established to the edge of the margin; and second, that financial contributions would be made primarily to developing countries, particularly least developed countries16. As such, production from Canada`s Northern Bay oil field, pursuant to Article 82 of the United Nations Convention on the Law of the Sea (UNCLOS)5, would trigger payments to the international community on the basis of production. While the overall legal framework for the research and development of seabed resources on Canada`s dolphins is well established beyond 200 nautical miles, Canada has not yet taken steps to meet this particular commitment. At the end of July 2018, Equinor Canada Ltd. (formerly Statoil Canada Ltd.) and the Premier of Newfoundland and Labrador have announced a framework agreement for the possible development of the North Bay oil discovery, located approximately 500 kilometres from the coast.1 Faced with the impasse in the state`s proposed regulated pipelines, and amid widespread concerns about the flight of capital from the Canadian oil and gas sector. ”2 The announcement was hailed as a rare good news for Canada`s raw materials industry. It was announced by the Prime Minister as a first step towards a new frontier, as well as a new era of deep-sea exploration in a new basin, the Flemish passport: ”The future of our offshore begins today.” 3 The agreement also includes $75 million through a research and development and education and training award to position the province as a centre of excellence for deepwater oil and gas activities. The North Bay Development Framework Agreement, announced on July 26, 2018, appears to remain silent on who pays the costs of implementing Section 82.
This may indicate that Newfoundland and Labrador will take the position that there is no need to address the problem between the province and project proponents, so that Canada remains alone to bear these costs. Unlike previous oil and gas projects on the province`s offshore coast, where manufacturing contracts have been contracted in modules, the agreement with Equinor is in tons, with 5,000 guarantees for the province as part of a competitive offer. The agreement, unveiled Thursday morning in St. John`s, calls for an investment of $6.8 billion $US in the pre-development and development phase, of which $3.4 billion will be spent in Newfoundland and Labrador. There is no guarantee that Equinor will continue its Northern Bay project, but if that is the case, there is a framework agreement with the provincial government. The 2005 Atlantic Agreement calls for the agreement to be reviewed by March 31, 2019.26 On February 13, 2018, at the annual meeting of the Newfoundland and Labrador Oil and Gas Industries Association, Premier Dwight Ball said the province had written to the Prime Minister to begin the review process to improve the benefits to the province through offshore activities. Two legal systems29, which have significant offshore oil and gas activities, have created a framework for the eventual application of Article 82. Both bear the costs of the section 82 obligation to operators. Everyone agrees, however, that the financial burden must ultimately be borne by revenues that would otherwise go directly to the state.