Equinor Reaches Deal with Canadian Province to Advance Bay du Nord

The provincial government of Newfoundland and Labrador said Tuesday it has reached an agreement with Equinor ASA to progress the postponed Bay du Nord oil project in Canada’s Flemish Pass Basin.

With initial estimated reserves of over 400 million barrels, Bay du Nord “represents a generational opportunity for Canada’s offshore – one that could open a new deepwater basin and shape the province’s energy industry for decades to come”, Equinor says on its website.

Discovered 2013 about 500 kilometers (310.69 miles) from shore, Bay du Nord has been paused since 2023. At the time, Norway’s majority state-owned Equinor cited “changing market conditions and subsequent high-cost inflation”.

Last year Equinor signed a preliminary deal to award the project’s floating production, storage and offloading unit to BW Offshore Group, as announced by the contractor September 1, 2025.

Under the agreement announced Tuesday by the province’s Mines and Energy Department, “[p]roject sanction is targeted for 2027, with first oil expected in 2031”. Under the 2018 “framework agreement” for Bay du Nord, initial production had been targeted for 2025.

“With today’s agreement, the provincial government has secured a path forward that delivers long‑term value, strengthens local employment and ensures benefits remain in Newfoundland and Labrador throughout the entire life of the project”, the department said in an online statement. “It puts Newfoundland and Labrador back on the map for global oil and gas investment”.

The department noted Bay du Nord is the province’s first standalone offshore hydrocarbon development since Hebron and its first deepwater project. Water depth at Bay du Nord is 600-1,170 meters (1,968.5-3,838.58 feet), according to Equinor.

Currently Equinor operates Bay du Nord with a 60 percent stake. Britain’s BP PLC owns 40 percent. The deal announced Tuesday allows the province to own a stake of up to 10 percent.

The provincial government expects a direct revenue of up to CAD 6.4 billion ($4.68 billion) in phase 1, the statement said, noting the new agreement exceeds what was negotiated 2018.

“A key part of the agreement is CAD 200 million in fabrication funds, which will facilitate long-term fabrication trades jobs in the province, intended to expand the province’s capacity for offshore and maritime fabrication and maintenance”, the department said. “The provincial government plans to use this funding to secure capital to build a large floating dry dock at Bull Arm”.

The agreement commits the developers to fabricating at least 95 percent of subsea components in the province. “Expressions of interest have been issued for construction work in Newfoundland and Labrador, including topsides components”, the statement said.

It added, “For the first time, the agreement includes targets for the employment of skilled trades apprentices – 10 percent for construction and 15 percent for onshore operations”.

“Other significant benefits commitments include a CAD 100 million contribution to research and development and a commitment of a minimum of 1.9 million person-hours of professional work in project management, procurement management and engineering”, the statement said.

“This project is the first life-of-field benefits agreement for an oil and gas project, which ensures a focus on benefits throughout the life of the project and not just during development”, it said. “This will result in over 31 million person-hours of work over 25 years”.

Newfoundland and Labrador Premier Tony Wakeham said, “Newfoundland and Labrador is officially back in the oil and gas business… And with the new floating dry dock we are breaking the boom-bust cycle of previous mega-projects and creating long-term and lasting building trades jobs in a brand-new maintenance and repair sector”.

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