One-time extension of the Arrangement on Offshore Revenues with Nova Scotia
Backgrounder
February 3, 2021
In 1986, the federal government and the province reached the Canada-Nova Scotia Offshore Petroleum Resources Accord to formally recognize Nova Scotia’s right to be the principal beneficiary of the oil and gas resources off its shores. The Accord gave Nova Scotia the right to establish and collect one hundred per cent of offshore resource revenues in the same way as if they were located on land within the province. In addition, the Accord granted the province the right to co-manage these offshore resources with the federal government.
In 2005, to address the unique fiscal circumstances faced by the province of Nova Scotia, the federal government agreed, under the terms of the 2005 Arrangement on Offshore Revenues, to provide time-limited protection to Nova Scotia to offset the negative impact of offshore revenues on its Equalization payments. This arrangement with Nova Scotia expired on March 31, 2020.
In 2018, Nova Scotia received a one-time settlement of $232 million after an arbitration process concerning how transportation costs were treated in the Sable Offshore Energy Project royalty calculations. The settlement recognized that transportation costs claimed had been too high, and thus past royalties paid were too low. As the Equalization program operates with a two-year data lag and three-year moving average, the one-time settlement payment will reduce the province’s Equalization payments from 2020-21 to 2022-23. Had these royalties been paid out initially, rather than retroactively, their impact on Nova Scotia’s Equalization payments would have largely been offset under the 2005 Canada-Nova Scotia Arrangement on Offshore Revenues.
The legislative amendment, announced today, would ensure that Nova Scotia is not adversely affected by the timing of the arbitration settlement and that the province receives the full support it is entitled to under the 2005 Arrangement. By extending the Arrangement until March 31, 2023, the government is upholding its commitment to Nova Scotia.
Media may contact:
Katherine Cuplinskas
Press Secretary
Deputy Prime Minister's Office
Katherine.Cuplinskas@dpmo-cvpm.gc.ca
Media Relations
Department of Finance Canada
fin.media-media.fin@canada.ca
613-369-4000
General enquiries
Phone: 613-369-3710
Facsimile: 613-369-4065
TTY: 613-369-3230
E-mail: fin.financepublic-financepublique.fin@canada.ca
Stay connected
Page details
- Date modified: