The transition agreement could result in Suncor paying up to 20% more in oil sands royalties than it would have paid under the previous terms.
The agreement provides that from January 1, 2010 until January 1, 2016, Suncor will pay between 25% and 30% of net profits (depending on oil prices) on the bitumen derived from its oil sands mining operations. In 2016, the company’s royalty rates for oil sands mining will reflect the new generic royalty regime.
In return, the government has provided Suncor surety until January 1, 2016, for various matters, including bitumen valuation methodology, allowed costs, royalty in-kind and certain taxes.
Rick George, president and CEO of Suncor Energy, said: We have reached a deal that provides a fair return to Albertans as owners of the resource, while also giving Suncor the certainty we need to plan for the future growth of our business.
