The federal and Alberta governments and Husky Oil Ltd. have agreed to provide interim financing to continue construction of a $1.6 billion heavy oil upgrader at Lloydminster, Sask.
The Saskatchewan government, also a partner in the upgrader, has balked at providing more funds.
Husky disclosed in April a $190 million cost overrun on the project in addition to a $175 million overrun in 1991.
Ottawa owns a 31-2/3% interest in the project, Alberta 24.17%, Saskatchewan 17.5%, and project operator Husky 26-2/3%.
Saskatchewan Energy Minister John Penner said his government won't Put more money into the project until an operating agreement has been worked out. Saskatchewan said it would not oppose part of its interest in the project being transferred to other partners who pay for the overrun.
Federal Energy Minister Jake Epp said there is a proposal that Saskatchewan's share of the latest overrun, about $33 million, be picked up by other partners on the basis of one-third each.
The 46,000 b/d upgrader is scheduled for completion in November.
The interim financing agreement covers about $90 million. Negotiations continue on the $100 million balance of the overrun.
Epp said the partners are dealing at the moment on the basis that Saskatchewan will not pick up a share of the $190 million.
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
