Canada ratifies Kyoto Protocol

Canadian Prime Minister Jean Chretien Tuesday signed the ratification for Canada to accept the Kyoto Protocol on Climate Change.

By OGJ editors

HOUSTON, Dec. 18 -- Canadian Prime Minister Jean Chretien Tuesday signed the ratification for Canada to accept the Kyoto Protocol on Climate Change.

Following the signing, Environment Minister David Anderson was expected to deliver it to the United Nations in New York for formal registration.

Parliament ratified the protocol by a 195-77 vote in the House of Commons last week. The battle, from the oil patch point of view, now changes its focus toward issues about how Kyoto will be implemented. Industry leaders and analysts remain concerned about the potential economic impact, particularly on oil sands development.

As a ratifying part, Canada is required to reduce carbon dioxide emissions by 6% from 1990 levels by 2012. (OGJ Online, Dec. 10, 2002).

"We have 10 years to get (the provinces) on board now. We think we are not very far from an agreement (with the provinces). . .it might be a question of 10 weeks," Chretien told reporters during a brief ceremony in Ottawa when he handed the documents to Anderson.

Reaction
The uncertainty surrounding Kyoto, said Lehman Bros. Inc., would serve as a "risk and an overhang on the share price of companies with oil sands exposure.

"If Kyoto is implemented, sources close to discussions in Canada tell us that it will take 1-2 years before the industry is informed about the full details of implementation," Lehman Bros. said. "This could potentially cause further delays in oil sands projects being developed as companies are likely to maintain a 'wait and see' approach. Additionally, we believe the uncertainty around the cost impact is an overhang on the share price of those companies with oil sands exposure.

"We also believe that the market is unlikely to pay for the future upside potential of oil sands projects until the uncertainty is removed," Lehman noted.

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