Three new super royalty areas are included in the agreement:
In new licence areas PL 1005 and EL 1093, the top royalty rate is 50 per cent. The super royalty is paid out in two steps – an additional 2.5 per cent when oil is equal or greater than US$50 West Texas Intermediate (WTI) and another five per cent when oil reaches US$70 (WTI). The super royalty rates apply after payout, and are on top of payout royalty rates of 30 per cent and 42.5 per cent.
For the portion of Hibernia South that is contained within the original licence area (PL 1001) but will be developed with the new subsea facilities, the super royalty is also paid out in two steps – an additional 7.5 per cent when oil is equal or greater than US$50 (WTI) and another five per cent when oil reaches US$70 (WTI). The main field is in payout, so these rates are on top of the 30 per cent royalty rate provided for in the original Hibernia royalty contract, which brings the total royalty to 42.5 per cent. Should supplementary royalty payout be achieved under the terms of the original Hibernia contract, the top rate will increase to 50 per cent.
An enhanced royalty rate of 42.5 per cent on every barrel of oil from the Hibernia South Extension that will be produced using the existing Gravity-Based Structure (GBS) as opposed to the subsea tie-back, estimated at more than 50 million barrels. This additional 12.5 per cent royalty is effective immediately. It has no price trigger. Should supplementary royalty payout be achieved under the terms of the original Hibernia contract, the top rate will increase to 50 per cent.
Industrial Benefits
Engineering and construction work that can be performed in the province shall be performed in the province.
Local manufacturers, consultants, contractors and service companies will be able to participate on a competitive basis in the supply of goods and services.
It is expected that the majority of expenditures required for the Hibernia South Extension will be spent locally, inclusive of drilling, which makes up the bulk of project costs.
The proponents will comply with the research, development, education and training requirements of the C-NLOPB and spend $10 million in the first three years after first oil on one or more legacy projects in these areas.
