WASHINGTON (Reuters) - The “nuts and bolts” of a deal to renegotiate royalties terms with oil sands producers Syncrude Canada Ltd and Suncor Energy Inc (SU.TO) should be in place by the end of January, Alberta Premier Ed Stelmach said on Tuesday.
Syncrude and Suncor, the world’s No. 1 and No. 2 oil sands producers, had contracts in place with Alberta stretching through 2015 before the province announced in October it will hike royalty rates by 2009. Those deals are now being renegotiated.
“The nuts and bolts should be completed by the end of January” on new contracts with both producers, Stelmach told Reuters in a telephone interview, en route to Washington.
It may take a few weeks longer to finalize details with Syncrude because of the joint venture’s large number of owners, Stelmach said.
Under the changes, royalties will be between 1 percent and 9 percent while project costs are being returned, and to between 25 percent and 40 percent afterward, depending on oil prices.
The province now takes 1 percent from oil sands producers until project costs are recouped, and 25 percent after payout.
In October, Stelmach gave Suncor and Syncrude 90 days to negotiate new deals with provincial officials. He did not say on Tuesday what the government is prepared to offer in return for breaking the contracts.
The royalty hike could mean an extra C$470 million ($465 million) in revenues flow into Alberta’s coffers by 2010 from all oil sands producers.
The changes are part of Stelmach’s overall plan to boost oil and gas royalties by 20 percent, or C$1.4 billion, by the end of this decade.
The industry had vigorously opposed the changes, saying that boosting the economic rent will send investment dollars elsewhere.
Syncrude Canada Ltd, located north of Fort McMurray, Alberta, is the world’s largest producer of synthetic crude oil, pumping out up to 350,000 barrels a day.
Its partners include Canadian Oil Sands Investments Inc COS_u.TO, Imperial Oil Ltd (IMO.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)
Suncor’s oil sands business produces about 260,000 bpd.
Additional reporting by Jeffrey Jones in Calgary; Editing by Christian Wiessner