The Canadian government agreed today to lift is seven-year-old embargo on increased sales of natural gas to the United States, clearing the way for a 50 per cent expansion of U.S. purchases from the major supplier.
In return, under the agreement reached in a meeting between visiting Vice President Mondale and Canadian Prime Minister Pierre Elliott Trudeau, the United States promised proposals to reduce tariffs on imports from Canada to help its troubled economy.
The specific contents of American concessions were not disclosed but senior Canadian officials expressed satisfaction with the package offered by Mondale.
At present, the United States imports 1 billion cubic feet of Canadian gas per day, about 5 per cent of total U.S. consumption. American industry officials had been talking about bringing in an additional 500 million to 600 million cubic feet per day, required in the northern tier states, if the embargo was lifted.
There was no discussion of price today. It must be negotiated by energy companies and the provincipal government of Alberta, from which the gas will be supplied. The federal government in Ottawa controls exports of natural gas through its licensing powers, while the provinces control the price.
Since 1971, the Canadians have sought to preserve their natural resources by scaling down their exports of oil to the United States and refusing to allow gas exports to increase.
Last year the midwestern and northeastern states were hit with severe natural gas shortages that closed schools and factories and threw 300,000 out of work because of the extreme cold. During the shortages, Canada provided gas-hungry pipelines with emergency sales to help meet the demands.
Since then Energy Secretary James R. Schlesinger and Canadian Energy Minister Gillespie have had a series of meetings to discuss bilateral energy issues, including future natural gas sales, and the construction of a joint 2,000-mile Alcan pipeline to carry gas from Alaska's North Slope to U.S. markets.
Alberta now has substantial surpluses of natural gas. Its officials have made it clear that they wanted to sell more to the United States but wanted in exchange tariff reductions on petrochemicals, beef and grape seeds sold in American market.
The agreement concluded by Mondale and Trudeau reflects a general improvement in U.S.-Canadian relations.
Mondale announced that Secretary of the Treasury Michael Blumenthal and Charles Schultze, chairman of the council of economic advisers, will visit Ottawa in March for talks with their Canadian counterparts on a variety of bilateral economic matters.
The agreement on natural gas stipulates that Canadians would be given the option to purchase Alaskan natural gas once the Alcan pipelin is completed. But additional sales to the United States would provide immediate cash flow to help construct the southern portion of the Alcan pipeline that runs through Alberta.
Mondale, who was greeted warmly today when he arrived on the first leg of his two-day Canadian tour, is scheduled to visit Alberta Wednesday.