Will economic downturn mean oil companies back out of social obligations?

There is no doubt the energy sector is getting hit hard thanks to low oil prices.

A report this week estimated some 185,000 jobs will be cut across the country when all is said and done, but does that mean companies have the right to renege on promises of community programs and developments?

Alan Ross is a partner with the Calgary law firm Borden, Ladner and Gervais.

He’s been keeping an eye on oil and gas companies during the downturn and says so far most are living up to their promises.

“They recognize that they have long term investments in a community. They recognize and take the long view on energy pricing and that they will have to deal with these communities on the projects in the future,” he said.

However, if low oil prices remain a year from now, Ross says companies may have to make some tough choices as they are not legally obligated to continue community programs.

“It depends on the economics of each particular company: how much they have invested, what their breakeven point is, for example, as to whether it makes sense a year from now to continue on with projects,” he said

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