Suncor-Petrocan tout ‘national champion'

[Guest guest]

Look for more energy firms to merge. It's the perfect time to form monopolies or

conglomerations that can put a stranglehold on people.

Because lawmakers are too stupid to see what is happening here, mergers of this

type will be approved. The mergers will encourage SMART investors to buy stock

in thesedirms. It will drive up the market, causing unwise people to invest all

over the market. But these unwise people will lose everything when they discover

their share purchases in anything but the energy sector are still worthless.

Administrator

http://business.theglobeandmail.com/servlet/story/RTGAM.20090324.wsuncor24/BNSto\

ry/Business/home

Suncor-Petrocan tout `national champion'

BOYD ERMAN

Globe and Mail Update

March 24, 2009 at 11:24 AM EDT

The combination of Suncor Energy Inc. and Petro-Canada will result in a

job-creation machine as mothballed projects are restarted, the chief executives

of the two companies said as they kicked off their campaign to sell the merger

to regulators and investors.

The making of a new, oil-sands focused national champion is crucial to ensure

that a Canadian company is able to play in the capital intensive world of the

sands, which is becoming an increasing focus for foreign behemoths such as BP

PLC, Suncor chief executive officer Rick and Petro-Canada head Ron

Brenneman told the Globe and Mail editorial board Tuesday.

" With the oil sands being the second-largest oil basin in the world, if you

don't have some very strong companies that can actually compete in our own

backyard, what you're going to end up with is a lot of foreign companies in

here, " said Mr. .

" That's not a bad thing. It's a good thing from a competitive viewpoint, but

since this is our resource, we should have some national champions that have the

technology, the breadth and the experience to be the leaders in it, " he said.

The companies would have survived the current slump in oil prices if they

remained on their own, but they have had to put off many projects while bigger

competitors have been able to forge ahead, Mr. Brenneman said.

" Their projects are carrying on, " he said. " Ours are on the shelf. "

Together, the companies can eventually spend as much as $1-billion a year on

capital projects and look to restart projects such as Suncor's Firebag Three and

Petro-Canada's Fort Hills, Mr. said.

Many of the projects become more economical because they can use existing

infrastructure that one of the companies already has, such as pipelines or

electricity production facilities, meaning they can go ahead sooner than if the

companies were independent, the executives said.

The construction jobs created by recommencing works on big oil-sands expansion

will offset the job losses that will inevitably be part of the merger, Mr.

said. Firebag alone would lead to about 3,000 jobs, he estimated.

" You're going to create a lot more construction jobs, " Mr. said. " Net net

for Canada, over time, you're going to create more jobs. "

The companies haven't figured out how many workers would lose their jobs as

Suncor and Petro-Canada combined operations in areas such as marketing and

marketing, but layoffs are inevitable, Mr. said.

Also, the company will likely have to sell or close many gas stations in

Ontario, where there are competition issues because Petro-Canada and Suncor have

stations in many of the same areas, with Suncor's operating under the Sunoco

name.

However, Mr. argued that the oil merger differs from the failed bank

mergers – which faced similar competition concerns – because a combined Suncor

and Petro-Canada would still face competition from foreign companies, while the

banking market was protected.

The executives said that once the merger is completed, they should not be

protected by the Petro-Canada Act, which prevents any one party from owning more

than 20 per cent of Petro-Canada's shares. Mr. Brenneman said that leads to a

discount in the company's share price, which makes it more difficult to raise

money at competitive rates.

" It's important if you're going to have Canadian champions of this magnitude to

not have one hand tied behind our back, because there's a perception of a

discount, " he said.