Premier Danny Williams describes a new agreement on sharing offshore revenues as a historic turn for Newfoundland and Labrador.

"What happened today for Newoundland and Labrador, and indeed for Canada, is a monumental event," Williams told reporters Friday night in Ottawa, following the end of a marathon series of meetings.

About 70 per cent of what the province earns from Hibernia is clawed back from equalization transfers.

"I have to take a deep breath. I'm very, very proud to be a Canadian this evening," Williams said.

Newfoundland and Labrador will receive $2 billion upfront as an advance against what it would expect to receive in royalties over the eight years of the agreement, which is retroactive to the beginning of this fiscal year.

In all, the federal government values the agreement as worth $2.6-billion for Newfoundland and Labrador.

External site: Government of Canada announcement of agreement

Nova Scotia will receive at least $830 million during the same period.

The agreement-in-principle also allows for it to continue for an additional eight years, should either province still be dependent on equalization.

Danny Williams

In Newfoundland's case, if the province does not qualify for equalization after eight years, it will receive transitional payments for two years, with a sliding scale kicking in.

Williams says the agreement fulfills Martin's election-campaign promise of last June.

"That promise, that commitment, has been delivered in full," Williams said, as Martin smiled behind him.

'No easy dollars'

The agreement also appears to signal a compromise between the two sides. Williams described the bargaining as tough.

"There's no easy dollars going to be squeezed out of this crowd," Williams said.

The agreement does not amend the Atlantic Accord, the original offshore pact reached in February 1985, while Brian Mulroney was prime minister. The terms of the Atlantic Accord expires in 2012.

The accord identifies Newfoundland and Labrador as the "primary beneficiary" of offshore revenues.

A chronology

The road to a new offshore energy deal has had numerous twists and turns: June 5: Paul Martin and Danny Williams have a phone conversation, in which Martin verbally endorses Newfoundland's demand to keep 100 per cent of its offshore royalties. In subsequent months, Williams repeatedly asks for the agreement to be put in writing. Oct. 26: Angered when the federal government tenders its terms, Williams walks out of a first ministers meeting on equalization. Nov. 15: Liberal backbenchers Scott Simms and Bill Matthews break ranks and vote for an Opposition motion on the Atlantic Accord issue. Nov. 23: In a critical meeting, Williams, Hamm and Goodale meet for nine hours in St. John's, with the premiers saying substantial gains have been made. Dec. 7: Frustrated by delays, Williams dispatches provincial Finance Minister Loyola Sullivan to Ottawa for an unscheduled meeting with Goodale. Dec. 9: In what is touted as a break in a deadlock, Williams travels to Halifax to meet Hamm and Alex Himelfarb, clerk of the Privy Council. Dec. 22: Williams, Hamm and Goodale meet on neutral territory in Winnipeg, in what Williams describes as a "do or die" negotiation. It ends without a deal. Dec. 23: Williams orders Canadian flags lowered from provincial government buildings to protest federal handling of the issue. Martin condemns the move. Jan. 3: Williams writes to Martin, asking him to intervene personally in the dispute. Jan. 10: Flags return to provincial government buildings; Williams said the move cost the province political points, but succeeded in capturing the country's attention. Jan. 14: Martin responds to Williams' letter, says Winnipeg offer delivers "exactly" what he promised in June. Jan. 28: Williams, Martin and Hamm reach deal after marathon meeting in Ottawa.

Successive provincial governments have argued that federal clawbacks do not allow the province to make substantial economic gains, so that it will be less dependent on federal transfers.

The negotiations kicked off on an optimistic note late Friday morning, with Williams and Nova Scotia Premier John Hamm saying they felt a deal was close at hand.

Hamm said a deal was "within hailing distance."

Earlier coverage: Cordial tones as Accord talks proceed

The prime minister met individually with each premier during the day, in a series of negotiations that were described as sometimes being tense.

Martin did not personally attend all of the sessions. The federal government was otherwise represented by Alex Himelfarb, the clerk of the privy council, and federal Finance Minister Ralph Goodale.

Natural Resources Minister John Efford also attended the sessions.

The provinces have campaigned for Ottawa to not reduce equalization payments as offshore royalties are collected.

The provinces have argued they in effect lose 70 per cent of their royalties because Nova Scotia's industry is dominated by natural gas.

Newfoundland has two oil fields – Hibernia and Terra Nova – in production, with a third expected to start pumping oil later this year.

Change in tone

The meeting with the prime minister was a goal Williams has pursued since last summer.

In June, during the federal election campaign, Martin agreed to commit to Williams' offshore-revenue proposal.

However, Williams was not able to obtain a written commitment from the federal government.

When a written offer was submitted, on the eve of an October first ministers meeting on equalization, Williams boycotted the meeting in protest.

He called the offer a betrayal of Martin's commitment, and said the October offer would have cost the provincial treasury more than $1 billion over the remaining term of the Atlantic Accord.

Williams and Hamm spent much of the fall working together during often contentious talks with the federal side.

Before Christmas, after a high-stakes negotiation in Winnipeg, Williams ordered the Canadian flag removed from provincial government buildings to protest what he called an insulting change in negotiating strategy by the federal side.

From Dec. 23: Canadian flags ordered down: Williams

After ending his 18-day flag protest, Williams later asked for a face-to-face meeting with Martin to clear the air.