Trudeau's plans to 'Canadianize' energy pose row
Waiting in the wings behind Prime Minister Pierre Trudeau's present crisis over the future of the Canadian constitution are his government's Mexican-style plans for the "Canadianization" of key industries dominated by US corporations.
During last spring's federal election, which brought Mr. Trudeau back to power after seven brief months of Conservative rule, his Liberal Party made a major "Canadianization" promise.
This was to raise Canadian control of the mainly US-dominated domestic oil and gas industries from the present 36 percent Canadian ownership to no less than 50 percent.
These two industries are the most dynamic in Canada, with major exploration activities for offshore oil under way in the high Arctic and about to start off Newfoundland.
In fact a senior executive of Gulf Oil of Canada admitted last month that the Newfoundland North Atlantic oil discoveries could be the largest to date in North America.
When the Trudeau government does move on genuine "Canadianization" of industry, it will probably apply Mexican-style methods of gradualism for local control, using both a major state oil corporation and a federal review board as vehicles for establishing Canadian ownership.
They will work this way. First, PetroCanada, the country's ever-expanding state oil company, set up by an earlier Trudeau government in 1974, will continue to buy outright Us and European-owned oil and gas companies in Canada at the exploration, refining, and retail levels.
This pattern began in 1976 with Petro-Canada's purchase of Atlantic Richfield of Canada for $320 million and Pacific Petroleums, the Canadian subsidiary of Phillips Petroleum of Bartlesville, Okla., in 1979 for $1.3 billion.
Today in western Canada, Petro-Canada operates its own chain of retail gas stations, like the state-run chains of Petroleos Mexicanos in Mexico or Petroven in Vanezuela, all of them once owned and operated by American oil multinationals.
Petro-Canada may also be casting envious eyes on the even larger integrated operations of Texaco Canada, Gulf Canada, or Suncor, the Canadian part of Sun the Oil Company.
Second, the Trudeau Government will strengthen the role of FIRA (Foreign Investment Review Agency), the body it also created in 1974 to screen the arrival of new foreign companies as well as the takeover from abroad of domestic ones.
FIRA could apply gradualism by insisting, for example, that corporate newcomers sell 25 to 40 percent of their stock to Canadians within five years, or give them majority ownership in any proposed joint ventures.
However, Mr. Trudeau's "Canadianization" plans are muddied already by his constitutional fight with the provinces, which includes who has final say over natural resources, the provinces or the government.
The bitter fight has concentrated on oil- rich Alberta, whose free-enterprise Tory premier, Peter Lougheed, with massive support from resident American oil executives as well as Canadian ones, loathe Mr. Trudeau's Canadianization plans and are saying so in public.
Business Week magazine has estimated that these kinds of very tough and very costly oil and gas explorations on land and in the oceans around Canada, plus more plants for extraction of oil from Alberta's tar sands, will require $450 billion in new capital by the year 2000, most of it coming from outside Canada.