Canada's New National Energy Program on Oil and Gas: What Are the Main Provisions. What Are the Reactions So Far

摘要

The Canadian goal is to achieve energy self-sufficiency by 1990. On October 28, 1980 the Canadian federal government announced a new National Energy Program (NEP) for oil and natural gas to achieve this goal. In formulating the program, the Liberal government dealt with two major political and economic influences in Canadian energy: provincial ownership of natural resources and the 70% level of foreign ownership in the Canadian petroleum industry. The broad objectives of the program are to achieve national energy security, create opportunities for Canadian participation, and share resource benefits among the provinces. The major provisions include: a 8% federal tax on oil and gas production; a natural gas federal excise tax; a pricing scheme which holds conventional oil prices down but gives incentives for oil sands, heavy oil, and tertiary recovery production; a gas pricing scheme which encourages substitution of gas for oil; a 25% carried interest for the government on federal leases; and a Canadianization incentives grant system which replaces the depletion allowances system. The producing provinces object to the gas excise tax as a federal instrusion on provincial rights. The provinces also object to the low oil prices. A majority of the petroleum industry opposes the NEP. Many companies predict increased Canadian dependence on foreign oil. Negative industry reactions are taking the form of budget cutbacks, project delays and suspensions, and removal of drilling rigs to the USA. However, some companies are giving indications of accepting the NEP. The US has accused the NEP of violating several international agreements. The USSR warmly endorses the NEP, but says it doesn't go far enough. The Canadian federal government defends the NEP against all charges and seems committed to making it work. The general feeling among observers is that there will be concessions made on all sides - federal, provincial, and industry. (ERA citation 06:023135)