With its pipes purged of steam, Ultramar Canada Inc.’s eastend Montreal oil refinery moved closer last week to a complete shutdown. But for Prime Minister Brian Mulroney, the political tempest stirred by the refinery closing was undiminished. On Parliament Hill opposition MPs relentlessly criticized the government’s decision late last year to allow British-owned Ultramar to buy the refinery from Gulf Canada—and then carry out its pledge to shut it down. Attempting to salvage political support— and jobs—in Quebec, Mulroney told the Commons on Wednesday that his government was seeking a buyer for at least part of the refinery. The prime candidate: a consortium apparently led by Lavalin Inc., a giant Montreal engineering firm. But despite the Prime Minister’s efforts, the mood at the refinery remained pessimistic. Said Robert Parent, 53, the refinery’s manager: “We cannot live on hope.”
In fact, neither the political crisis nor the economic situation that led to it seemed likely to be easily solved. Already, more than 160 of the refinery’s 433 employees have been laid off by the closure. The rest are expected to disappear by month’s end. Most of the workers live in Montreal’s economically depressed east end, which has suffered two other major plant closings in the past four months and faces the possibility of more layoffs in the months ahead. And while the Prime Minister last week silenced the most vocal unrest within his Quebec caucus, some Tory MPs were still concerned about what they perceive as Quebec’s lack of influence in cabinet. Declared Suzanne Blais-Grenier, the former minister of state for transport who resigned from cabinet last month over the Ultramar affair: “The government’s decision may have been good for Canada, but it was terrible for Montreal.”
In fact, Maclean's has learned that the consumer and corporate affairs department has asked the Restrictive Trade Practices Commission to investigate the events surrounding the $120million purchase of Gulf’s eastern Canadian assets by Ultramar, which also operates another refinery in Quebec. The commission will also examine whether the firm’s conditions for selling the refinery violate Canadian competition law by insisting on terms that would prevent any buyer from selling the refined oil in Quebec.
Arthur Dickinson, Ultramar’s vicepresident of corporate relations, denied that the company was insisting on any
noncompetition condition. But Quebec’s energy minister, John Ciaccia, said that an inability to find a non-Canadian market for the oil helped scuttle last week’s attempt by Gaz Métropolitain to purchase the refinery. The effort collapsed after Gaz Métropolitain—a company controlled by the Quebec governmentfailed to reach a longterm contractual agreement to sell refined products to an oil broker in the northeastern United States. Said Ciaccia, who assisted the company’s efforts:
“We supported the Gaz Métropolitain offer, which included a fiveyear noncompetition clause designed to meet Ultramar’s insistence that whoever bought the refinery would not
compete with them in Quebec.”
Still, the consortium’s bid—publicly revealed only after Gaz Métropolitain withdrew its offer—may include an attempt to obtain the refinery by operating it only for export production. Bernard Lamarre, Lavalin’s president and a longtime acquaintance of Mulroney’s, organized the company’s offer. Unconfirmed reports also said that Communications Minister Marcel Masse, a former Lavalin vicepresident, was closely involved in the negotiations. Meanwhile, a second major Montreal engineering firm, The SNC Group, announced that it is weighing a bid on behalf of unnamed industrialists for the purchase of part of Ultramar’s assets —two petrochemical plants on the refinery site. A decision by SNC was expected this week, z But while there Q, seemed to be several potential buyers, Ultra— mar appeared reluctant to sell. Said Ultramar’s Dickinson: “It is going to be very difficult for any deal to go through.” The company’s rationale: it needs to use the plant’s existing tank space to store oil. Ultramar also plans to use parts of the Montreal plant to up-
_ grade its refinery in St-
Romuald, near Quebec City.
Indeed, a senior Montreal executive close to both the oil industry and the Ultramar transactions told Maclean's that it is unlikely that the refinery itself will ever reopen. “The whole deal is designed to let the oil companies operate at high capacity and gain sufficient market share to make money,” he said. Engineering companies might be hired to undertake feasibility
studies, he added, but they were “unlikely to buy a refinery that would wreck their relationship with the very oil companies for whom they build plants.”
Within the Conservative caucus, Mulroney moved swiftly last week to restore unity. Although Robert Toupin, MP for Terrebonne, north of Montreal, maintained that he was still considering leaving the party to protest the government’s actions, other dissident Quebec MPs rejoined the ranks. Said Vincent Della Noce, the Duvernay MP who had signed a petition protesting the sale: “We fell into a Liberal trap. There have been four years of agony in Montreal East and the Liberals are to blame, not us.”
But Della Noce, a former president of an oil consultants firm in Quebec, said he was “disturbed” about the behavior of the major oil companies in the Gulf sale and the subsequent refinery closure. He added that he wanted Ottawa to release a report prepared for consumer and corporate affairs by combines investigator Michael O’Farrell.
Some opponents of the refinery closure say the O’Farrell report concludes that the action will leave Quebec short of refining capacity and more dependent on costlier imported refined products. In the Commons last week Energy Minister Pat Carney said the province in fact had an oil surplus that would not be affected by the refinery closing. But Blais-Grenier told Maclean's: “There exists a philosophy within the government that there should be only two centres for petroleum production in Canada—Ontario and Alberta.” And the Oil Buyer's Guide, a New Jerseybased weekly journal which is highly regarded in the industry, reported in its Jan. 13 issue that the closing of the Ultramar refinery would leave the province with a daily deficit of 56,000 barrels of refined oil. Said the journal: “It appears that Quebec refineries will have to import refined oil at a high rate throughout 1986 to satisfy demand.”
Still, the Ultramar controversy appears to have convinced most Quebec MPs that Ottawa will have to intervene directly to improve the economy of Montreal’s east end. Energy Minister Ciaccia, for one, said that the Quebec government was acting on the Ultramar case to “save what is left of our petrochemical industry and to build on it.” But, said Robert Parent, who is now charged with shutting down the refinery where he worked for seven years, “you cannot keep people around here doing nothing while the politicians talk. I have to start deciding what to do with the rest of my life.”
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