Editorial No need to panic over Amoco deal

Dome Petroleum’s sad saga continues much in the news these days, a situation that is likely to continue for some time as the politicians are getting more and more into the act. Sparking this latest surge of banner headlines was the leading offer by an American firm in a bidding war to take over this debt-plagued company, one of this country’s leading Canadian oil and gas complexes which is teetering on the brink of bankruptcy.

Getting a lot of ink, hardly surprisingly, is the leader of the New Democrat party, Ed Broadbent. But we thought he over reacted with his outcries like “outrageous”, “a dark day for Canada”, “it must be stopped”, etc.

All things being equal, most of us would like to see ownership of this country’s oil industry in Canadian hands such as TransCanada Pipelines rather than Amoco. But their offers were far from equal.

Dome itself is largely US owned. And is Amoco such a villain? After all it has been operating in our oil patch since 1948 where it has built a reputation as a solid and highly successful performer. Furthermore, it has the ready cash to finance a much warranted major drilling program on Dome’s massive Canadian land holdings. Indeed a number of senior oil people here describe the proposed Dome-Amoco marriage as a good fit. (Incidentally this is the same company that financed its full 50-50 share in that big Detour Lake joint venture gold mine in Quebec, which it discovered and stuck with through many trials and tribulations).

There are, of course, political implications galore in this entire affair which, for the Mulroney government, just couldn’t have surfaced at a worse time. For example, the Americans have made unfettered investment one of their top priorities in the crucial and touchy trade negotiations now being pushed so hard by Prime Minister Brian Mulroney. If he were to intervene to block this takeover, or to sweeten the TransCanada offer with government money and/or special concessions, those free trade talks would probably be doomed. They have already been shaken by Ottawa’s recent massive handout to rich General Motors to keep a Quebec auto plant open in the face of numerous closures in the United States by that same company.

Mr Broadbent, we fear, would be quite ready to pour untold millions — even billions — to get that Dome empire in Canadian hands, even government hands. And that’s money Ottawa definitely does not have.

The Americans, we are sure, remember Ottawa’s Foreign Investment Review Agency that was born in the Trudeau era and must wonder what might happen to its successor, Investment Canada, under a Liberal or more likely Liberal-NDP government.

Certainly Dome’s board of directors must think the Amoco offer superior to that of tcpl. Otherwise, they would have undoubtedly accepted the latter. But of course if tcpl comes up with something better, that would be quite another matter. But hopefully it would be on economic grounds, not by political strings.

We see this as essentially a private-sector matter, hopefully to be sorted out through a private sector solution.

As revealed in a front page story in this paper last week, both Noranda Inc and Placer Development are eyeing the purchase of a prized block of 20.8 million shares of Dome Mines held by Dome Petroleum, any possible sale of which would not likely change under any Dome Petroleum purchase scenario.