CALGARY - The merging of Suncor Energy Inc. (TSX:SU) and former Crown corporation Petro-Canada (TSX:PCA) could create a Canadian energy giant hefty enough to compete with heavyweights like ExxonMobil Corp. (NYSE:XOM) in the North American arena.

The combined company, which would have a market capitalization of $43.3-billion and would operate under the Suncor name, would be the largest energy company in Canada and the fifth largest in North America.

"It's a made-in-Canada response to the challenges presented by global market uncertainty today," Petro-Canada CEO Ron Brenneman said on a conference call with analysts Monday.

"We need to face head-on the issue of global competition in a time of economic uncertainty. In these difficult times, we believe that joining forces provides the strength we need to be a leader in value creation in an extremely competitive industry."

Under the proposed all-stock deal worth more than $19 billion, Petro-Canada shareholders would own 40 per cent of the new Calgary-headquartered entity and Suncor shareholders would own the rest.

Petro-Canada shares (TSX:PCA) shot up more than 20 per cent on trading on the Toronto Stock Exchange, rising $6.05 to $35.70 while Suncor's stock lost more than two per cent, or 69 cents to$30.21.

The companies, both headquartered in Calgary, both active in the Alberta oilsands and both involved in refining and retailing, say their plan will reduce their costs by $300 million at a time when Alberta's oilpatch grapples with tough economic conditions.

Part of those savings will include some job losses where positions overlap with one another, Suncor CEO Rick George told reporters.

"That is going to be difficult," he said, declining to give specifics on how many workers would be affected.

"I don't want to minimize the concern about jobs, especially in these difficult times, but I want to underline that in the mid to long-term ... the merger will be a strong contributor to job creation and wealth creation in this country as we pursue growth in ways that were not achievable with two separate companies."

Petro-Canada's portfolio spans Canada and the globe, with assets in the oilsands, Canada's East Coast, Libya, the North Sea and elsewhere.

By contrast, Suncor, the oldest and second-largest oilsands operator, has bulk of its activities centred around that industry.

Suncor's George told the conference call that the merged company would be focused on Canada and the oilsands, but that all of the assets will be evaluated.

"This will be a very disciplined approach. It will not be scattergun. But it will be a Canadian oilsands-centric type of strategy," George said.

While the combined entity will keep the Suncor name on the corporate level, Petro-Canada's brand will remain when it comes to selling refined products like gasoline and diesel.