Canada's oil industry is enjoying an unprecedented boom after diversifying export destinations to reduce dependence on the United States, with which it has been at odds. It also appears to be easing concerns that the opening of Venezuela's oil market could reduce demand for Canadian oil.
On the 27th (local time), the Financial Times (FT) in the United Kingdom reported in an article titled "Canada's oil industry booms on surging sales to China" that "Canadian corporations are achieving record production and boosting shareholder returns despite weak global oil prices."
According to the Canadian government, oil production in the first half of last year hit an all-time high of 5.19 million barrels per day. Buoyed by this, the share prices of major Canadian oil producers such as Suncor Energy, Canadian Natural Resources, Imperial Oil, and Cenovus are approaching a 10-year record high.
The main reason for the boom in Canada's oil industry is cited as the diversification of export destinations. Until now, most Canadian oil had been exported to the United States, and about 70% of U.S. refining facilities were designed to process Canadian heavy oil.
As relations between the two countries deteriorated, this structure emerged as a risk factor. After the Donald Trump administration took office and tensions rose between the United States and Canada, Canada began accelerating efforts to diversify export markets to reduce reliance on the United States. A prime example was the signing last November of a memorandum of understanding (MOU) to build a pipeline connecting northern Alberta, Canada's oil-producing region, to the Pacific coast in western British Columbia.
At the time, Canadian Prime Minister Mark Carney announced the MOU, saying, "We will make Canada an energy superpower, reduce emissions, and diversify export markets at the same time." Since then, Canada has actively expanded oil exports to Asia, particularly China.
As a result, according to shipping data analysis from the Baltic and International Maritime Council (BIMCO), Canadian oil sales bound for China last year reached 887 million barrels, more than quadruple from a year earlier. This contrasts with U.S. oil exports to China over the same period, which fell 61% to 390 million barrels.
David Chelini, global head of energy and diversified industries at the Toronto Stock Exchange, said, "This is the best time for Canada's oil sands industry," adding, "We are now exporting oil to China, Korea, and India."
As Canada succeeds in diversifying exports, concerns are receding that the U.S. opening of Venezuela's oil market could inflict major damage on Canada. Canadian oil is similar in composition to Venezuela's heavy Merey crude, and there had been projections that the dominance of Canadian oil—which has accounted for about 60% of U.S. oil imports—could weaken.
FT assessed that "Canada's oil industry is booming as it moves into the Asian market to reduce reliance on U.S. sales," adding, "This is leading to a result that dispels some analysts' concerns that a surge in Venezuelan oil supply could reduce demand for Canadian oil."
Some also argue that Canadian oil actually holds a competitive edge over Venezuelan oil. Heather Exner-Pirot, director for energy, natural resources, and environment at the Macdonald-Laurier Institute, said that in an international environment of growing uncertainty, Canada is a relatively less risky choice for oil buyers. "Canadian producers have a brand image of reliability, but Venezuela does not," Exner-Pirot said.