Quebec Premier Philippe Couillard is denying having given any orders to put the kibosh on plans for exploratory oil and gas drilling on Anticosti Island.
Mr. Couillard insisted his government, which is a partner in the project, is fulfilling all of its contractual obligations.
Oil and gas company Petrolia Inc. was in court in Montreal on Wednesday seeking an injunction to force the government and a private firm to invest in the drilling.
Petrolia and Corridor Resources yielded their exploration permits for Anticosti Island in 2014 in exchange for the promised investment. That deal was reached under the previous Parti Québécois government.
The exploratory work on three wells was scheduled to begin this summer and was aimed at determining Anticosti's hydrocarbon potential in terms of quality and volume.
Petrolia argues Mr. Couillard has given orders for the project not to go ahead – an allegation Mr. Couillard denied as he continued a trade mission in Munich.
"That's false, but again the courts will decide and we have respected the contract to the letter," he said.
Petrolia is fighting an attempt to defer the exploration work until at least 2017, which the company says could result in an unspecified number of job losses and jeopardize the future of the project.
Company lawyer Marc-André Landry argued at the Montreal court hearing his client is ready to proceed but that the other partners in the project are refusing to put forward the promised funding of nearly $13-million between them.
Ressources Québec, a subsidiary of Investissement Québec, and Saint-Aubin E&P have refused to sign off on the budget for 2016.
"There appears to be a willingness to not allow the project to move forward," Mr. Landry said.
A lawyer for the Quebec government said the issue was not a political one but rather a disagreement between business partners.
Ressources Québec believes there's no urgency to spend important sums of public money this year, while the Natural Resources Department is reviewing its hydrocarbon and energy policy.
"At no point has Ressources Québec said it didn't want to go ahead with drilling," Marc-André Fabien said. "What we've said is it's preferable to wait until 2017 to go ahead, when we will better know what the government's requirements will be."
Since attending an international climate conference in Paris last December, Mr. Couillard has increasingly distanced himself from the project in eastern Quebec.
He has repeatedly stated the deal was reached when the PQ was in power, has expressed concerns about environmental risks and has questioned the project's economic viability.
"I'm not the promoter of the project and I said as such in Paris," he said. "My hands are tied."
The Quebec Environment Department gave the green light in June for the work to proceed. It requires fracking and the use of 30 million litres of water from waterways, including rivers that are home to salmon.