Exxon, Murphy sue Canada over NAFTA

Exxon Mobil Corp. and Murphy Oil have served notice that they plan to sue Canada for breaching the North American Free Trade Agreement by permitting Newfoundland to require them to spend millions of dollars on research in the province, said the U.S. oil giants.

The two companies plan to sue the federal government, alleging it violated a previous NAFTA agreement when a provincial-federal agency adopted a new guideline on research and development in November 2004.

The complaints stem from the Terra Nova and Hibernia offshore oil projects, in which both U.S. oil companies own stakes.

In notices of intent filed in September, ExxonMobil and Murphy Oil said the new regulation would cost them C$40.08 million and C$10.02 million, respectively, even if there is no need for such investment.

The companies call the guideline ‘restrictive’ as it specifies a fixed amount of money to be invested, and cite the Newfoundland and Labrador government’s push for more revenues from the offshore oil industry.

‘The government of the province has increasingly encouraged the (Canada-Newfoundland and Labrador Offshore Petroleum Board) to put into place more robust local content requirements,’ the documents allege.

Newfoundland’s premier Danny Williams, now campaigning in western Newfoundland for November’s provincial election, wasn’t immediately available for comment.

—The Associated Press