N.L. still considering Bay du Nord equity stake following project delay, says energy minister
Rothschild preparing current equity stakes for market, briefing document shows
Newfoundland and Labrador's energy minister says the postponement of the Bay du Nord megaproject doesn't mean the opportunity for the province to purchase a direct stake in it has passed.
Norwegian oil giant Equinor announced two weeks ago that the project would be put on hold for up to three years, postponed due to inflationary pressures and the rising cost of construction.
Speaking with Radio-Canada following a speech at a manufacturers' conference on Wednesday, Energy Minister Andrew Parsons said he and the province were surprised by the postponement but haven't dismissed purchasing the 10 per cent equity stake.
"It's still there. We still have that option, but we've made no decision whether to take, to not take," Parsons said, adding there haven't been any discussions since the postponement was announced.
His comments come as the province reviews its stake in three oil projects — a 4.9 per cent stake in Hebron, a five per cent stake in the West White Rose expansion project and an 8.7 per cent stake in the Hibernia South Expansion project — all of which are being assessed by Rothschild and Co. as of March.
Parsons said no decision has been made regarding the sale of those assets.
To sell or not to sell
A briefing note obtained by Radio-Canada through an access-to-information request, however, may contradict that.
The note is heavily redacted but shows part of this phase of Rothschild's work with the province is to "prepare the equity assets for market."
The province has not decided to sell, said Parsons, and the main focus of the review is to assess the volume and value of assets.
"The first part was figuring out what is that value. The second part is figuring out are there buyers, or interested parties. And even in the last 18 months things have changed dramatically within that," Parsons said. "But in terms of is there a document or has there been a direction as to 'we need to proceed with that,' I can unequivocally say no."
The report issued by the premier's economic recovery team, often referred to as the Greene Report, recommended the province sell its oil assets when the price of oil increases.
Asked if he believes it still makes sense to hold onto their stakes, Parsons said he does believe the assets are worth more than they were when the report came out in May 2021.
"If we had sold in August 2020, we would probably be looking at it now saying, 'Hmm, we sold at the wrong time.' Right now things have changed, but where are we going be in two years, five years, 10 years?" he said.
"[The Greene report] was a great report and it was nice to have some very smart individuals provide us with some guidance. But at the end of the day we are elected. We are charged with making these decisions."
Asked about the Bay du Nord equity stake, NDP Leader Jim Dinn believes it doesn't make sense for the government to buy shares in a new oil project when it's already been told that assets should be sold.
"They seem to be at odds with each other, doesn't it?" he said.
"On one hand we're looking at selling and the other hand we're saying, 'Well, equity. We're still prepared to put an investment into it.' That is a disconnect."
PC Opposition lLeader David Brazil said he isn't against the province buying into Bay du Nord if it makes financial sense for the betterment of residents but he needs more information on it first.
"We haven't seen any assessment on what the value of buying into it, what the longevity would be, what the costing would be to the taxpayer, how that costing would be paid over a period of time and what the return on the investment would be as part of the process," he said.
With files from Patrick Butler and Kyle Mooney
