SEARCH NEWS
ENERGY: Suncor to pay up to 20% more royalties, Syncrude continues talks with province
        (AlbertaIndex, January 30, Wednesday) --- The government of Alberta and Suncor Energy Inc have reached an agreement that will see the company pay increased royalties starting in 2010 - a full six years before its existing Crown agreement was scheduled to expire.
        Suncor has agreed to pay rates under the new royalty framework up to a maximum increase of 20 per cent from the rates that currently apply to Suncor’s mining operations starting January 1, 2010 and continuing until January 1, 2016.  At that time, the rates under the New Royalty Framework will apply to all Suncor’s projects.

The province will provide certainty on a number of matters, including commitments:
    •    not to seek revenues from Suncor’s oil sands project using measures outside the New Royalty Framework, such as additional taxes.
    •    not to change key definitions such as allowed costs related to Suncor’s oil sands project.
    •    to provide certainty around the bitumen valuation methodology that will apply in the calculation of Suncor’s royalties as of January 1, 2009.
    •    not to take royalty-in-kind from Suncor’s Oil Sands Project before 2012.

Suncor’s Firebag Project, which is not covered by the Crown agreement, will transition to the new regime in January 2009.
Royalties paid by any individual company are considered proprietary information. However, the terms of this agreement - including Suncor’s transition to the new oil sands royalty structure and up to 20 per cent in additional royalties - are in line with the goals of the New Royalty Framework.

Under amendments to the Crown agreement made in 1997, Suncor and the Crown agreed to the rates of the generic oil sands royalty regime (a pre-payout one per cent rate based on gross revenue and a post-payout 25 per cent rate based on net revenue) until 2016.

“I commend Suncor for its commitment to these discussions and for what we’ve been able to achieve,” said Premier Ed Stelmach.  “We have struck a good deal that will provide increased royalties for Albertans, while providing certainty for Suncor and its shareholders.”

“Suncor recognizes the oil sands resource we are developing is owned by the people of Alberta and Albertans have the right to benefit economically through royalties,” said Rick George, president and CEO of Suncor Energy. “We approached our discussions with government looking for certainty and we’re satisfied we have that now.”

Discussions with Syncrude Canada, the holder of the other major oil sands Crown agreement, are ongoing, said Energy Minister Mel Knight.

“As long as talks are continuing and progress is being made, both the government and Syncrude Canada remain committed to resolving this matter and we will take the necessary time to do so.”

Last year, the provincial government announced it would raise royalties by as much as $1.4 billion by 2010. The oilsands companies greeted the decision with disbelief and anger, and threatened to shift their investments to other provinces and even other countries.


Did you enjoy this article? Please share it!
Reddit!Del.icio.us!Google!Netscape!StumbleUpon!Newsvine!Furl!Yahoo!