ST. JOHN'S, N.L. - Newfoundland and Labrador says a pre-election deal struck between Quebec and Ottawa over disputed oil deposits in the Gulf of St. Lawrence could help settle the long-running feud.
At issue is a potentially vast stock of subsea black gold that has been estimated at up to two billion barrels of recoverable oil -- twice the size of Hibernia east of St. John's, N.L.
Quebec Premier Jean Charest said Thursday that the accord reached after 12 years of negotiations to give his province royalties from the so-called Old Harry oil and gas reserve is "historic."
Old Harry straddles a 1964 boundary that places most of the reserves on Quebec's side. One theory is that the site was named for a nearby community on Iles-de-la-Madeleine.
Newfoundland and Labrador disputes the boundary and says a tribunal to be set up as part of the Quebec accord could resolve the issue.
"We have been encouraging the province of Quebec and the federal government to do exactly what they've done today," Premier Kathy Dunderdale told reporters.
"This had to happen before we could take next steps. So we'll have a look at what they've signed off on today. We don't accept the 1964 boundary and we will go to the dispute resolution process as laid out in the accord."
Charest stressed the long-term prospects of a deal announced the day before the Conservative government is likely to fall, triggering a federal election. The Tories hope to hold on to 11 seats in Quebec and can now cast the accord as delivered results.
"We're very happy ... especially given the fact energy issues are issues that play out over a few generations," Charest said in Quebec City.
"It's more than just a question of day-to-day events. And in this case, it's not an exaggeration to say this is an historic agreement."
Charest noted that an ongoing environmental study must wrap up before the province exploits any of the Old Harry deposit.
Sources within the federal government said the new deal will see Quebec get 100 per cent of the royalties from its resources.
Newfoundland and Labrador has already granted an Old Harry exploration licence to Corridor Resources Inc. The Halifax-based company hopes to get environmental approval to drill by 2014.
Yvonne Jones, leader of the Liberal Opposition in Newfoundland and Labrador, said she's concerned that the Old Harry deal is federal "election bait" for Quebec.
"We could stand to gain a lot, or lose a lot. And I think it's a real game of Russian Roulette for us right now.
"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."
Parti Quebecois Leader Pauline Marois criticized the agreement, saying Quebec shouldn't have to get involved in an arbitration process to determine the boundary issues.
Matthew Mendelsohn of the Mowat Centre for Policy Innovation, a non-partisan research centre at University of Toronto, said side deals that enrich single provinces are a growing pattern of "free for all fiscal federalism."
"I don't blame Quebec," he said in an interview. "Quebec is pursuing what Newfoundland got," as did Nova Scotia in similar offshore joint management Atlantic accords.
"We're starting to have a system of equalization which is no longer principled."
Mendelsohn in part blames electioneering and political expedience.
"The federal government has allowed politics to undermine the legitimacy of an important national program of inter-regional sharing between more prosperous and less prosperous (provinces). And in the process, they have been whittling away at the legitimacy of that program across the country."
