Canadian Prime Minister Brian Harper and Nova Scotia Premier Rodney MacDonald ended a political feud last week after reaching an agreement to share offshore oil and natural gas revenue.

The provincial and federal governments had been at odds since the Canadian budget was unveiled in March. MacDonald, who said the budget did not give Nova Scotia its fair share of offshore revenue, said the budget violated an Atlantic accord reached by former Nova Scotia Premier John Hamm and former Canadian Prime Minister Paul Martin. The two governments came to terms one day after a landslide reelection of Newfoundland and Labrador Premier Danny Williams, who has said he would work to unseat Harper following a dispute over his province's offshore revenue sharing agreement with Canada.

"I believe this is a historic breakthrough and a thoroughly sensible way to overcome a dispute which has bedeviled successive federal and provincial governments for over 20 years," Harper said. "These are not easy issues -- the Atlantic accords are highly technical arrangements over which people of good faith can have differing interpretations."

Under the agreement, Nova Scotia is guaranteed not to lose any royalties under changes made to the original offshore accord between the province and Canadian officials. In 2008, Nova Scotia will have to choose between the 2005 federal accord or an equalization formula, but in any case it would not lose money as a result. All of the money expected over the life of the accord also would be protected to ensure that Nova Scotia is the principal beneficiary of its offshore petroleum resources.

Federal and provincial officials also settled a dispute over the offshore on what is known as the "Crown share" payments, which were guaranteed to Nova Scotia in 1982 and 1986 accords.

A three-member panel will be set up to study the value of the province's cash royalty, which was part of Nova Scotia's original 1985 offshore agreement. Production ramped up in the Scotian offshore in the early 1990s, but the federal government has not paid royalties to the province. Once it has completed its review, the panel is expected to report with a binding decision, which could lead to a large payment to the province.

"We believe that Crown share is worth hundreds of millions of dollars to Nova Scotia," said MacDonald. "For nearly two decades, we made no headway in resolving this issue, and now we have come to a solution that reaffirms a right that was established in law in the early 1980s."

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