CORNER BROOK, N.L. — U.S. oil giants ExxonMobil and Murphy Oil are accusing Ottawa of breaching the North American Free Trade Agreement by allowing Newfoundland to require them to spend millions of dollars on research in the province.

The two companies plan to sue the federal government, alleging it violated a previous NAFTA agreement when a provincial-federal agency adopted a new guideline on research and development in November 2004.

In notices of intent filed last month, ExxonMobil and Murphy Oil say the new regulation would cost them $40 million and $10 million, respectively, regardless of the commercial need for such investment or of the resources in place to sustain it.

The companies call the guideline "restrictive" as it specifies a fixed amount of money to be invested, and cite the Newfoundland and Labrador government's push for more revenues from the offshore oil industry.

"The government of the province has increasingly encouraged the (Canada-Newfoundland and Labrador Offshore Petroleum Board) to put into place more robust local content requirements," the documents allege.

The complaints stem from the Terra Nova and Hibernia offshore oil projects, in which both companies own stakes.

Premier Danny Williams, now campaigning in western Newfoundland for next month's provincial election, wasn't immediately available for comment.