Canada sees Europe as new oil market as federal elections announced

Canada is headed to federal polls on April 28 to elect new members of its House of Commons, with contesting political parties unveiling plans to build oil and natural gas infrastructure to the coasts and open up new markets in Europe and Asia – all in an effort to wean the country away from the US.

A prime issue in the elections will be the 25% tariff proposed by the US administration on major Canadian exports (oil and gas is tariffed only at 10%) that both parties have termed as "unfair" and "unjust," spurring nationalism among the electorate.

The Western Canadian province of Alberta is the single-largest exporter of oil to the US at about 4.3 million b/d which provides feedstock for refineries primarily in the Midwest and the Gulf Coast. It also exports almost 5 Bcf/d of natural gas.

"We need to fight the Americans and deal with [President] Donald Trump's tariffs," Liberal party leader and Prime Minister Mark Carney said March 23 on a webcast from Ottawa while announcing elections. "We will act to unlock major infrastructure projects and get them moving rapidly including clean and conventional energy, critical minerals and build new trade corridors with reliable trading partners."

The federal government's aim is "getting things done including pipelines and building out the infrastructure more broadly in Alberta," Carney told reporters a day earlier in Edmonton.

"That will include energy and trade corridors from here [Alberta] to deepwater ports in Nunavut in the Arctic. The commitment is to deliver those projects that we agree are national priorities and deliver faster and on a different scale," he said.

There are 338 seats in the outgoing House of Commons, with the Liberals holding 152 seats, followed by the Conservative Party at 120, Bloc Quebecois (33), New Democratic Party (24), Green Party (2), three independents and four seats are vacant.

For its part, the Conservative Party leader Pierre Poilievre has unveiled plans to resurrect the 1.1-million b/d Energy East oil pipeline (from Alberta to the Atlantic Coast and targeting markets in Europe and Asia) and the 520,000-b/d Northern Gateway (from Alberta to the Pacific Coast) that were canceled during the past nine years of Liberal Party rule and also create 'Canada Shovel Ready Zones.'

"These zones will be areas already permitted for construction, meaning the permits will not just take less time, but will already be completed when a company decides to build a mine, LNG terminal or pipeline, bringing home thousands of jobs for Canadian workers and taking back control of our economy from the Americans," Poilievre said in a statement on his party website.

Liberal Party stance on exports

The US has been Canada's traditional market for its oil and gas and one way of dealing with tariffs is to reach out to new markets like Europe and Asia.

"We are in a new world today and need to build new partnerships and new opportunities," Carney said.

However, opening a new market, whether it is for hydrocarbons or critical minerals, will come with its challenges including the lack of infrastructure, Greg Stringham, a former vice president of markets with the Canadian Association of Petroleum Producers, told Platts March 24. Platts is part of S&P Global Commodity Insights.

"An efficient market for crude oil exports would see barrels being refined in closest markets," Stringham said. "Sending Western Canadian heavy barrels to Europe and Asia is still a relatively untested market and Alberta's producers will find themselves competing against Saudi Arabia."

Also, building a pipeline from Alberta to New Brunswick would take at least three years, Stringham said, adding the Liberal Party which has been in power since 2015 has had a reputation for delaying project approvals.

As a first step, the Liberals can reduce the multiple layers of approvals, Heather Exner-Pirot, director of natural resources, energy and environment program with MacDonald Laurier Institute, told Platts.

"There is room for the Impact Assessment Act to go, make available more indigenous equity and make the regulations in a faster way by getting a regulatory sandbox," Exner-Pirot said. "Once you have a project that is in the national interest, all stakeholders will work as a team and not at arms length."