Ultramar, Petro-Canada to form Gasoline Alliance

Petro-Canada (Calgary, Alberta) and Ultramar Diamond Shamrock Corp. (San Antonio, Texas) plan to form a Canada-United States oil refining and marketing joint venture.

Under the plan, Petro-Canada, the country's second largest integrated oil company, would control 51 percent of the new refinery and gas station partnership.

Ultramar Diamond Shamrock, one of America's largest independent refiners and marketers, would control the remainder. The deal is expected to be finalized this spring.

If the deal is approved by Canada's Competition Bureau, the two companies would share five refineries in Canada and the northeastern United States with total refining capacity of 500,000 barrels a day. They would also share 3,500 service stations and sell heating oil to 300,000 customers.

"The efficiencies of the joint venture in eastern Canada and the northeastern United States, along with national economies of scale, make this an excellent deal for Petro-Canada shareholders,'' Petro-Canada chief executive Jim Stanford said in a statement.

"Ultramar Diamond Shamrock gains geographic diversification through shared control of a substantially larger and more competitive business,'' said UDS CEO Roger Hemminghaus.

In addition, several gas stations in Quebec and Atlantic Canada, "where there is obvious overlap'' would be shut down, Petro-Canada spokesman Rob Andras said, adding the partnership's gasoline would be sold under his company's banner in Canada.