Check The Telegram today and the feature story in the business section by Moira Baird.
Baird, known for solid, dependable reporting demolishes the story in The National Post yesterday that Ottawa planned to sell its 8.5% share in the Hibernia project. Next time the Post wants to do a story on the east coast offshore, they might want to make a call to Moira to find out what is going on.
“There’s no plans to sell the shares of Hibernia. Where that story came from in the (National) Post I have no idea, the minister of finance (Ralph Goodale) has no idea whatsoever about it,” [Efford] said Wednesday evening. That's a quote from Baird's story.
Provincial natural resources minister Ed Byrne is quoted as saying he believes the shares should be transferred to the provincial government without going to sale. Again, I would refer Minister Byrne to the position taken by his national leader, Stephen Harper on this point just for the sake of information. The Martin government has made no comment on potential sale or transfer of the shares, other than the comments by federal natural resources minister John Efford in today's Telegram.
Just to give some accurate background on the Hibernia shares, here's a story Moira Baird wrote last year on the Canada Hibernia Holding Company. Bear in mind these figures are for 2003 and before; we will have to wait until later in the year to find out what the current revenue profile looks like with higher oil prices.
The Hibernia shares held by Ottawa have become a source of controversy and a great deal of misunderstanding and misinformation, some of it deliberate, much of it inadvertent. No matter what you hear, put faith in Moira Baird's story before you accept anything to the contrary.
Jan. 20, 2004
OFFSHORE
Headline: Hibernia means millions to feds
By Moira Baird
The Telegram
The Canada Hibernia Holding Corp. - the company that minds Ottawa's 8.5 per cent stake in the Hibernia joint venture - has been earning profits for the federal government since 2002.
You won't easily find the company's annual financial statements in federal documents, though.
By Dec. 31, 2002, the Canada Hibernia Holding Corp. (CHHC) repaid Ottawa's investment in Hibernia - a total of almost $431 million spent between 1993 and late
1997, when first oil flowed from the field.
Ever since, Ottawa's share of the Hibernia revenue has been in the black, earning profits for the federal government.
Just how much profit isn't clear because CHHC's financial statements for 2003 aren't yet available. Since then, the price of oil has risen and Hibernia's annual production limit has been raised almost 23 per cent to 80.4 million barrels of oil.
$237 million in sales
In 2002, CHHC generated $237 million in crude oil sales revenue, according to the company's annual financial statements obtained by The Telegram.
The corporation repaid the remaining $127-million federal investment in the Hibernia joint venture - and also earned a profit of $99.8 million in 2002.
Since Hibernia began producing oil in 1997 until Aug. 31, 2003, the project has generated $180 million in royalties for the Newfoundland government.
On the expense side of the ledger, the Canada Hibernia Holding Corp. paid out $89.6 million in 2002. Those expenses included:
* $56.8 million in depletion and depreciation of the resource;
* $21.9 million in operating costs;
* $5.9 million set aside for future costs of abandoning the gravity-base structure, an environmental liability for six Hibernia partners;
* and more than $1 million in administrative costs.
CHHC is a four-person operation based in Calgary.
The company pays the bills, makes operating decisions with Hibernia partners, sells its share of the oil to the highest bidder, arranges for transportation of that oil to market, and collects the revenue from the sale of the oil.
Although CHHC operates as a private company, it is not required to report quarterly financial statements because it is not publicly traded.
Dividends are paid to the Canada Development and Investment Corp., CHHC's parent company. In turn, it remits the money to the federal government.
New use for old corporation
The Canada Development and Investment Corp. is a little-known Crown corporation that has just one other subsidiary, Canada Eldor Inc. This second subsidiary is responsible for the federal government's liability for nuclear waste and the cost of decommissioning and cleaning up old uranium mine sites.
Other Canada Development Investment Corp. subsidiaries, such as de Havilland Corp., Cameco Corp. and Fishery Products International, have been privatized.
The federal government has five partners in the Hibernia joint venture - ExxonMobil, Chevron Canada Resources, Petro-Canada, Murphy Oil and Norsk Hydro.
mbaird@thetelegram.com
