Federal Election Sparks Side Deal with Quebec

At the eleventh hour, after more than a decade of backroom negotiation, the Province of Quebec and the Federal Minister of Natural Resources, Christian Paradis, who also happens to be the MP for the Quebec district of Mégantic—L'Érable, have inked a deal on offshore oil and gas revenues.

The deal side steps Newfoundland and Labrador’s long standing Provincial boundary dispute with Quebec and could see Quebec reap as much as 9 billion from a disputed 30kilometer long oil and gas deposit situated between the two Provinces.

At issue is the “Old Harry” oil and gas reserve estimated to contain as much as 2 billion barrels of oil, a field nearly twice the size of the Hibernia oil field on the Grand Banks of Newfoundland.

Quebec Premier Jean Charest said Thursday the deal to give his province the royalties from the “Old Harry” oil and gas reserve is "historic".

With this agreement Quebec will retain 100% of the royalties from their section of the oil field and the Federal government can head into the next election saying they have delivered for Quebec, but what becomes of Newfoundland and Labrador?

With the boundary dispute between the two Provinces left unsettled nobody really knows just how much of the oil field actually rests within the boundaries of Quebec making it impossible to determine just how much of the revenue truly belongs to La Belle Province.

In its rush to prop up political support in Quebec the Federal Conservative government has agreed to the arrangement with Quebec based on a much disputed boundary document worked out by the Premiers of Quebec and the four Atlantic Provinces back in 1964 but which was never signed off on by Parliament, as is required by the Constitution.

Decades after that agreement came into being, when the boundary between Nova Scotia and Newfoundland and Labrador was finally settled, the courts ruled that the 1964 agreement was not valid but that hasn’t stopped Quebec or the Conservative government from using it in this case.

Newfoundland and Labrador Liberal leader, Yvonne Jones, says she is worried the Old Harry deal is federal "election bait" for Quebec.

"We could stand to gain a lot, or lose a lot. I think it's a real game of Russian Roulette for us”

"We need to get into the details of where the federal government is headed with Quebec on this particular deal. Is it election bait? How much of it are they giving away? Where is our stake into it, and at what point do we come into the picture?"

"I'm absolutely dismayed to learn today that the province of Newfoundland and Labrador was not engaged in this negotiation in any way."

For her part the newly minted Newfoundland and Labrador Premier, Kathy Dunderdale, said that the agreement with Quebec contains a dispute resolution clause the Province intends to invoke in an effort to ensure that the boundary recognized is not the one stitched together in 1964 but one that adheres to the International Law of the Sea as set out by the United Nations. A similar process was used to settle the Province’s boundary with Nova Scotia.

The concern for many in Newfoundland and Labrador is the speed with which the deal seems to have been finalized, what the details of the “accord” entail and the fact that Newfoundland and Labrador will be expected to utilize a dispute mechanism setup without any input from the Province.

Meanwhile, Parti Quebecois Leader Pauline Marois has been quoted as saying that Quebec shouldn't have to get involved in an arbitration process to determine the boundary issues.