Quebec and the Federal Government have entered an agreement to give the province 100 per cent of the oil and gas royalties from the portion of the Old Harry formation that lies within the province’s undersea boundary in the Gulf of St. Lawrence.

The Old Harry formation, which may contain up to 2 billion barrels of oil, straddles between the undersea boundaries of Quebec and Newfoundland & Labrador. The agreement relies on the 1964 undersea boundary between the two provinces. Quebec Premier Jean Charest indicated the agreement contains an arbitration clause to deal with potential boundary disputes.

Quebec is under a self-imposed moratorium on offshore drilling until 2012, and will continue its course despite the signing of the agreement.