Newfoundland Premier Williams Wins Fight with Big Oil

Newfoundland Premier Williams Wins Fight with Big Oil

Sixteen months ago Newfoundland and Labrador Premier Danny WILLIAMS stared hard into the eyes of Big Oil - one of the most powerful industries on the planet. At stake was the multi-billion-dollar Hebron offshore oil deal that would, said Williams, live or die on his terms and his demands. Last week, Big Oil blinked.

Williams did what few politicians would have the tenacity to try: risk a multi-billion-dollar deal and all the benefits it would bring to a province with a hard-luck past, in exchange for an ownership share in the project and a generous royalty system. Last year, Williams practically dared oil companies to abandon the province. "Well, fine. Go somewhere else," he said. "We'll still have our oil." Critics called Williams's approach overly confrontational - even theatrical - and warned that he would poison the well for future dealings. But the gamble paid off. The project's lead partners, Exxon Mobil and Chevron, agreed last week to give the province 4.9 per cent equity in the project for $110 million and drop their demands for roughly $500 million worth of tax credits. And all those who called the premier a grandstander are now eating their words.

Williams says his "rigid approach" was based on a relatively simple guiding principle he's had since taking power - "no more giveaways," he said this week, in an interview with Maclean's. "That's my mantra. That's the reason for us being here in government and that's why I'm in politics."

The negotiation was classic Williams, a tough-talking populist who seems to delight in high-profile duels with powerful foes. But he insists his heated rhetoric is neither an act nor a negotiating tactic. "People think it's theatrics or antics. It just comes from a really strong passion and an intense gut feeling," he says. "You have to know Newfoundland and Labrador. We have been hard done by and as a result we're very passionate. I just display that openly - I wear it on my sleeve."

A year ago, the Hebron deal hardly seemed like a bad one for Newfoundland. It promised to pump billions of dollars into the provincial economy and to be a robust source of tax revenue for decades to come. Williams was under tremendous pressure from all corners, including the federal government, to get it done. When negotiations broke down last year and the oil companies left town, it seemed Williams had badly miscalculated.

But if Big Oil was expecting their withdrawal to trigger a backlash against the premier, they failed to understand how deeply his defiance resonates with Newfoundlanders. "Once we dug in and stated our position, that was it. We weren't moving," he says. "And the people of Newfoundland and Labrador were solidly behind the government. They were basically saying that they're quite prepared to leave the oil in the ground."

Looming large in the background of these talks was the 50-year-old Churchill Falls deal - a hydroelectric project that gave away much of the financial benefits to neighbouring Quebec. It still haunts the province, and Hebron offers the chance to put all that painful history in the past. "I think that's what motivates me more than anything," says Williams.

In fighting Big Oil, Williams is in many ways being Williams, says Stephen Tomblin, a political science professor at Memorial University of Newfoundland. "He's doing this because he has an interest in doing this." But his approach happens to play well in a political system in which tough talk over resources (and with Ottawa) is par for the course, says Tomblin.

The negotiations haven't spoiled the relationship with the oil industry, says Williams. In the end, the two sides weren't that far apart, he says. "There's a lot of goodwill now between the government and the industry." If bad blood simmers, it's with the federal government. Williams says Prime Minister Stephen HARPER's decision not to back him in putting pressure on the industry after talks broke down delayed a deal.

Williams says the derisive nickname "Danny Chavez" (after Venezuelan President Hugo Chávez, who has moved to nationalize oil resources) came from the Prime Minister's Office. It was a "knee-jerk" reaction by those who failed to understand the importance of the deal to Newfoundlanders, he says. Did it bother him? "Sticks and stones," says Williams.

Other companies looking to develop his province's resources can expect similarly tough tactics. "The people we deal with know that when we dig in on something like that, we don't move," says Williams. And why should he? Having tamed Big Oil, his popularity is soaring. With a provincial election set for Oct. 9, his rivals look like lambs before the slaughter. Opponents in Ottawa can grumble and call him names, but at home, says Tomblin, "He's a God."

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Maclean's September 10, 2007