The first thing we need to accept is the majority of our MHA's have no idea what they are talking about as it relates to Hibernia and the federal government's 8 1/2 % share.
This is Danny's strength - the ignorance of a fair number of Cabinet, the backbench , and the opposition.
As I have spent some time conversing with most members I feel confident in my first statement. As citizens who rely on the leadership of our provincial MHA's we must demand they spend some time learning about the value of this asset. I hope this blog will assist those MHA's that have a genuine interest in understanding the potential value and importance of this asset to Newfoundland and Labrador.
If they fully understood this it would have been and would be a top priority for provincial members.
The Government of Canada holds it's 8 1/2 % interest in Hibernia through the Canada Hibernia Holding Corporation (CHHC) - that company was incorporated under the provisions of the Canada Business Corporation Act on December 4, 1992. That company was acquired by the Canada Development Investment Corporation (CDIC) in March of 1993. The Company is subject to the Financial Administration Act.
Basically this company was formed to participate in the working cost and investment in the Hibernia project as a partner. The Government of Canada gave the funds necessary to CHHC to pay it's part to develop Hibernia. This was necessary at the time to move the project forward with oil prices ranging from 14 to 20 dollars a barrell (1993).
REF
In late 1997 first oil from Hibernia began to flow and by 1998 the project was making enough money where the CHHC could meet its obligations to the project without further money needed from the government of Canada. All money orginally supplied by Canada has been repaid along with 1/2 billion more in clear profit to the feds. Today all monies flowing after normal operational costs and expenses is pure profit for Ottawa. We will talk about this in greater detail later in this post.
The Hibernia Managment and Development Company Ltd. (HMDC) is a company which acts as the agent for all partners of the Hibernia project.
The owners of Hibernia are:
ExxonMobil Canada (33.125%)
Chevron Canada Resources (26.875%)
Petro-Canada (20%)
Canada Hibernia Holding Corporation (8.5%)
Murphy Oil (6.5%)
Norsk Hydro (5%)
Government of Newfoundland andLabrador (0 %)
I have highlighted the federal government ownership. This is the asset we are talking about here.
Currently the only two holdings of the CDIC for the feds are:
1. Canada Hibernia Holding Corporation
2. Canada Eldor Inc.
The role of the CDIC is to hold investments for the Government of Canada and manage them until divestiture (sale). This in keeping with investments of Canada to develop riskier projects in various regions to ensure certain projects proceed. Obviously oil developments off the coast of Newfoundland and Labrador are no longer viewed at the same risk level as in 1993 because the price of oil has gone and held above $70 a barrell. Having said this here are a list of other projects Canada has invested in for various regions, managed and divested by the CDIC.
Company Name Year of Sale Proceeds
Canadair 1986 $ 140 million
The de Havilland Aircraft of Canada 1986 $ 90 million
Teleglobe Canada 1987 $ 505 million
Fishery Products International 1987 $ 104 million
Canada Development Corporation 1986/87 $ 361 million
Noridon International Inc. 1991 $ 165 million
Varity Corporation 1987/91 $ 9 million
Telesat Canada 1992 $ 155 million
Cameco Corporation 1992/95 $ 320 million
Co-enerco Resources Ltd. 1993 $ 74 million
Ginn Publishing Canada Inc. 1994 $ 10 million
Varity Corporation 1996 $ 31 million
Theratronics International Ltd. 1998 $ 15 million
Varity- Massey - Fergason you know farm equipment and engines
Co-enerco - you know western canada oil exploration
Needless to say Central Canada's fair share.
Outside of this the government of Canada has sold interests in various other enterprises such as Air Canada and Petro-Canada outside of this CDIC.
So that takes care of the basic background....You still with me MHA's?
Let's get to the meat of CHHC or the 8 1/2% share in Hibernia the feds hold.
The first insult is that the CHHC is operated out of Alberta, yup that's right - because Alberta needs to have east coast oil to boost federal presence out west.
Danny and MHA's and of course Loyola H and his fed buddies -
MOVE THE CANADA HIBERNIA HOLDING CORPORATION TO NEWFOUNDLAND AND LABRADOR.
The CDIC the holding company for the CHHC is located in Ottawa - considering the only real money making asset of the CDIC is Hibernia move that here too.
This is worth a few million dollars a year and some great corporate jobs.
Now let's get to the profit. Let's look at what the feds have hauled in over 2004 and 2005 for their piece of Hibernia.
Always remembering that they have already recovered all of their investment of $410 million.
2004 Straight Profit $133 million dollars + federal tax (approx) $55 million = $188 million
2005 Straight Profit $222 million dollars + federal tax (approx) $90 million = $312 million
This does not include the hundreds of millions in years prior to 2004 paid to the feds.
This ends Part 1.
Back to Part 2
Back to Part 3
sue kelland dyer
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