Canadian oil giants closer to completing merger

CALGARY, Alberta - The government's Competition Bureau on Tuesday approved the merger of Suncor Energy Inc. and Petro-Canada that will create Canada's largest energy producer once the deal is completed.

After clearing this key hurdle, the companies said they now intend to make their merger final on August 1.

"Our focus now is to get the final pieces in place to close the deal and launch what will be Canada's premier energy company," said Suncor CEO Rick George, who will head-up the energy firm.

Suncor and Petro-Canada, two of Canada's largest oil and gas producers, announced their merger plans in March. The merger would create Canada's largest energy producer worth more than 43 billion Canadian dollars (US$38 billion).

In order to get the approval of the Competition Bureau, the companies agreed to sell 104 gas stations in southern Ontario in order to allay concerns that the merger would undermine competitiveness in the Ontario market and result in increased pump prices.

"We believe that we have secured a very positive outcome for consumers," said Melanie Aitken, interim commissioner of competition, in a statement.

"Requiring the companies to sell retail outlets will lead to increased competition by independent retailers who can expand their market presence."

After the merger, Suncor plans to sell gasoline under the iconic Petro-Canada brand.

Petro-Canada has a network of more than 1,300 retail outlets across Canada, while Suncor only had a handful of Sunoco-branded stations in southern Ontario.

The Competition Bureau is also requiring Suncor and Petro-Canada to sell about 1.1 billion liters (300 million gallons) annually of Toronto-area fuel storage and distribution capacity to rivals during a 10-year period.

They also must supply 98 million liters (26 million gallons) of gasoline each year, for a decade, to independent gasoline marketers.

"The parties' commitment to sell terminal space in the Greater Toronto Area is important to promoting a competitive dynamic in the market," Aitken said.

The merged company will be among the largest energy names in North America, and would rival Royal Bank of Canada as the largest company by market capitalization listed on the Toronto Stock Exchange.

Suncor is the oldest and second largest producer in the oilsands, behind the Syncrude Canada Ltd. consortium, in which Petro-Canada has a 12 percent interest. Suncor will eclipse Syncrude as the largest oilsands name once it takes on Petro-Canada's assets at Fort Hills and MacKay River.

The combined company will have refineries in Edmonton, Alberta; Sarnia, Ontario; Montreal, Quebec; and Denver, Colo. George has said Suncor has no intention of selling any of those operations. In Denver, Suncor refines and sells gasoline under the Phillips66 brand.

It is unclear what Suncor intends to do with Petro-Canada's operations in Atlantic Canada — where the company holds large offshore interests — Libya, Syria and the North Sea.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.