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China Seeking Canadian Oil

22 December 2004

The New York Times reports that Chinese energy companies are maneuvering to strike ambitious deals in efforts to win access to Canadian oil.

Canada, the largest source of imported oil for the United States, has historically sent almost all its exports of oil south by pipeline to help quench America’s thirst for energy. But that arrangement may be about to change as China, which has surpassed Japan as the second-largest market for oil, flexes its muscle in attempts to secure oil, even in places like the cold boreal forests of northern Alberta, where the oil has to be sucked out of the sticky, sandy soil.

“The China outlet would change our dynamic,” said Murray Smith, a former Alberta energy minister who was appointed this month to be the province’s representative in Washington, a new position. Mr. Smith said he estimated that Canada could eventually export as many as one million barrels a day to China out of potential exports of more than three million barrels a day.

“Our main link would still be with the U.S. but this would give us multiple markets and competition for a prized resource,” Mr. Smith said. [...]

Chinese companies are also said to be considering direct investments in the oil sands, by buying into existing producers or acquiring companies with leases to produce oil in the region. In all, there are nearly half a dozen deals in consideration, initially valued at $2 billion and potentially much more, according to senior executives at energy companies here.

Canada’s oil production from the sands surpassed one million barrels a day this year and was expected to reach three million barrels within a decade. The bulk of output is exported to the Midwestern United States. That flow pushed Canada ahead of Saudi Arabia, Mexico and Venezuela this year as the largest supplier of foreign oil to the United States, with average exports of 1.6 million barrels a day.

Even so, there is the perception among many in Alberta’s oil patch that Canada’s rapidly growing energy industry remains an afterthought for most Americans. That might change, industry analysts say, if Canada were to start exporting oil elsewhere.

Competition for oil is starting to hit closer to home. (Earlier post.)

Here’s a breakdown of the top 6 exporters to the US in October 2004, according to data from the EIA. (Actual imports, not average daily rate.) Canada, which was number one in September, slipped behind Mexico to number 2.

Total actual imports from September 2004 to October 2004 increased 10%, from 290 million barrels to 320 million barrels.

Top Petroleum Exporters to the US, Oct 2004
CountryBarrels (millions)% total US Imports
Mexico 53.394 16.7%
Canada 52.311 16.3%
Saudi Arabia 49.011 15.3%
Venezuela 41.229 12.9%
Nigeria 31.889 10.0%
Iraq 20.000 6.2%

December 22, 2004 in China, Oil | Permalink | Comments (0) | TrackBack (0)

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