The Canadian government will sell Petro-Canada Inc. as part of a deficit reduction program.
In a federal budget unveiled Feb. 20, Finance Minister Michael Wilson said Ottawa also will cancel federal financial support for the $4.1 billion OSLO oil sands development project in northern Alberta and an exploration incentives program.
Ottawa has been considering sale of Petro-Canada for some time as part of a program to privatize government owned companies. The integrated oil company has an official book value of $4.2 billion.
Wilson said details of the proposed sale will be disclosed later.
Petro-Canada has sold some assets and made substantial staff cuts in the past year.
The federal government had promised $650 million in loans and grants for the 78,000 b/d OSLO project near Fort McMurray, planned by a group led by Esso Resources Canada Ltd.
The finance minister said the government will pay its share of engineering studies under way and scheduled to be completed by July 1991. He said the Esso group and the Alberta government must then decide whether to go ahead with the project.
Ottawa's exploration incentive program paid companies about 30% of exploration costs. Cancellation will save the federal government an estimated $50 million in 1990 and $125 million in 1991-92.
Copyright 1990 Oil & Gas Journal. All Rights Reserved.