Reuters – Suncor Energy Inc has agreed to buy rival Petro-Canada to create Canada’s largest oil company, as the pair seek to tackle tough conditions in the oil sands industry by slashing costs.

Suncor will pay C$18.43 billion ($14.9 billion) for PetroCanada in the all-share deal which targets $1.3 billion in savings after soaring costs and plummeting oil prices made it hard to turn a profit from squeezing crude out of tarry soil.

The deal comes after a period of missed earnings targets and a project delay at Petro-Canada and is expected to be completed in the third quarter of 2009.

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