ALL AMOUNTS ARE STATED IN U.S. $
CALGARY, Alberta — Agrium Inc. (TSX and NYSE: AGU) announced today the Arbitration Panel, which
was appointed to determine Union Oil Company of California’s (Unocal) gas supply obligations to Agrium’s
Kenai, Alaska nitrogen facility, released its award late yesterday.
The Panel awarded Agrium damages of $36.5-million plus interest of $2.1-million for failure of Unocal to supply
the required daily quantities to April, 2004 and directed determination of further damages to June 30, 2004. The
damage award will be reflected in Agrium’s third quarter financial results.
As part of its decision, the Panel concluded that Unocal’s supply obligation was limited to certified gas reserves in
those leases which were specifically dedicated to Agrium. The award determined Unocal’s supply obligation for
the contract years ending June 30, 2005, June 30, 2006, and June 30, 2007 of 48.7 BCF, 36.3 BCF, and 18.6
BCF, respectively. Forecast gas supplies decline to a nominal amount subsequent to June 30, 2007. Either party
to the contract may request a reserve certification annually which could increase or decrease delivery obligations
after June 30, 2005.
The Panel specifically reserved for future determination whether Unocal’s liability for damages is limited to $50-
million should Unocal fail to deliver the specified contract quantities after June 30, 2004.
“We are pleased that the Panel found that the contract obligates Unocal to supply gas volumes substantially in
excess of Unocal’s proposed volumes. The Panel’s finding that Unocal must supply 48.7 BCF for the current
contract year should allow us to operate at 92 percent of capacity through to June 30, 2005 and at 70 percent of
capacity for the following contract year, without additional third party purchases. This assumes Unocal meets its
contractual obligations,” said Mike Wilson, Agrium’s President and CEO. “This decision addresses only the
disagreements surrounding the gas contract. It does not resolve our other issu