CANADA SETS OIL INDUSTRY AID PACKAGE

  Canada's federal government
  will provide a 350 mln dlr oil industry aid package that
  includes cash incentives designed to cover one-third of a
  company's oil and gas exploration and development costs, Energy
  Minister Marcel Masse announced.
      The aid program will inject about 350 mln dlrs a year into
  the oil and gas industry and could lead to more than one
  billion dlrs in new investment, Masse told a news conference.
      The program will affect drilling done anywhere in Canada on
  or after April 1, 1987.
      Masse told reporters that the government's oil industry aid
  package is aimed at small and medium sized companies.
      The aid package, called the Canadian Exploration and
  Development Incentive Program, will restrict the total payments
  that any individual company can claim to 10 mln dlrs a year.
      Masse said the program will probably generate new
  employment equivalent to 20,000 people working for a year.
      He said oil industry aid is needed because exploration and
  development spending dropped by at least 50 pct since world oil
  prices fell during the first half of 1986.
      Energy Minister Masse said the federal government decided
  to provide cash incentives so a large number of non-tax paying
  companies, mainly small Canadian firms, will receive the full
  value of the incentive. Such companies would not immediately
  benefit from tax benefits, he said.
      The federal government also wanted to deliver an aid
  program outside the tax system. Finance Minister Michael Wilson
  is now reviewing Canada's tax system and plans to announce tax
  reform proposals later this spring.
      An important feature of the aid program is a decision to
  let companies issue flow-through shares, allowing investors to
  benefit from the subsidy rather than restricting benefits to
  only participating companies, he said.
      Allowing flow-through shares under the program will make it
  easier for companies to attract investors in exploration and
  development, Masse said.
      He told reporters his department is still considering
  whether to allow partnerships and other entities to qualify for
  the subsidy.
  

