March 12, 2008 / 12:27 PM / 10 years ago

Syncrude won't accept loss over royalty-report

TORONTO, March 12 (Reuters) - Imperial Oil (IMO.TO) said Syncrude Canada Ltd won’t let shareholders suffer a loss over a royalty deal with the Alberta government, the Financial Post reported on Wednesday.

Tim Hearn, Imperial’s chief executive, told the newspaper that partners in the Syncrude oil sands project, located north of Fort McMurray, Alberta, were prepared to negotiate a new deal under the province’s royalty framework that replaced a government agreement expiring in 2016.

Syncrude Canada Ltd is the world’s largest producer of synthetic crude oil. It has maintained a tough stance on royalties ever since the Alberta government unveiled royalty hikes for the province’s oil and gas producers last year.

“We have been very clear,” said Hearn. “We told the government that we were prepared to change the contract to the new terms primarily on the condition that the inherent value of the contract was somehow recognized in the new arrangement.”

Earlier this year, Suncor Energy (SU.TO), the No. 2 oil sands firm, said it would pay up to 20 percent more in royalties on oil sands output under renegotiated terms with the provincial government.

Hearn said Syncrude may accept the same terms as Suncor after the loss in value has been recognized, the newspaper reported.

Both Suncor and Syncrude had contracts in place with Alberta stretching through 2015 before the province announced it would hike royalty rates by 2009.

Along with Imperial, Syncrude partners include Canadian Oil Sands Investments Inc. COS_u.TO, Petro-Canada PCA.TO, ConocoPhillips (COP.N), Nexen Inc. NXY.TO, Nippon Oil Corp. 5001.T unit Mocal Energy Ltd. and Murphy Oil Corp. (MUR.N).

Reporting by Ka Yan Ng, editing by Mario Di Simine

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