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After US Oil Snub, Canada Focuses on China

Reuters
Monday, 6 Feb 2012 | 9:58 PM ET

Canada will focus on exporting oil and other goods to China and other booming Asian economies even if Washington overturns its decision to block a pipeline that would have sent more Canadian crude to the United States.

The Syncrude oil sands extraction facility near the town of Fort McMurray in Alberta Province, Canada.
Mark Ralston | AFP | Getty Images
The Syncrude oil sands extraction facility near the town of Fort McMurray in Alberta Province, Canada.

Speaking ahead of Canada's most high-powered trade mission to Beijing for almost 15 years, Prime Minister Stephen Harper told Reuters that Canada must focus on markets that are growing, regardless of the fate of the Keystone XL pipeline, which is proposed to carry crude from the Alberta oil sands to Texas refineries.

The U.S. State Department blocked Keystone last month, saying the didn't have time for a thorough environmental review.

"I think we need to be clear. As much as I want to see that Keystone project proceed, I think this incident ... underscore(s) the fact that it is in this country's national interest to be able to sell products beyond the United States," Harper told Reuters in an interview.

"And I don't think a reversal of an American decision can change that fundamental reality. So I think it is absolutely essential that we find ways of being able to sell our products to the biggest growing markets in the world, and those are in Asia."

Canada — the largest supplier of energy to the United States — was profoundly disappointed by Washington's decision to veto TransCanada's Keystone project. The United States — which is by far Canada's largest trading partner — is unlikely to look at it again until next year.

At 170 billion barrels, Canada's oil sands are the third-largest crude deposit in the world, and Canadian exports to bigger markets will be a focal point of Harper's meetings in China, where he will be accompanied by five cabinet ministers and the heads of major corporations seeking business.

China has already made clear it would like to import Canadian oil to help power its rapidly expanding economy.

China does not currently import Canadian crude. Enbridge wants to build a pipeline from Alberta to the Pacific but it could take years to approve and complete the project.

China's international oil firms, taking a more long-term view, have spent or pledged to invest more than C$11 billion ($11.1 billion) in Canada's energy patch since 2005.

Top Level Meetings

During his trip Harper will meet President Hu Jintao and Premier Wen Jiabao as well as two important regional players — Chongqing Communist Party chief Bo Xilai and Wang Yang, the chief of Guangdong province.

The Canadian mission, which will arrive in Beijing on Tuesday, is the largest of its kind since 1998. Guests include top executives from Shell Canada , Enbridge and Canadian Oil Sands as well as uranium producer Cameco and mining firm Teck Resources.

Other firms include plane and train maker Bombardier, Air Canada, Eldorado Gold, SNC-Lavalin Group, Canfor and West Fraser Timber.

The size of the delegation is another sign of how Harper's Conservatives have shifted position to embrace China. The Conservatives came to power in 2006 harboring suspicions about Beijing's human rights record.

Harper skipped the 2008 Beijing Olympics and did not travel to China until late 2009, when Wen admonished him publicly for taking so long to visit. Hu came to Canada the next year, when the two men set a target of boosting trade.

In 2010, Canadian exports to China were worth C$13.2 billion while imports totaled C$44.5 billion. Bilateral Canada-U.S. trade in 2010 was just under C$557 billion.

Harper cited problems in the United States and Europe as a reason for focusing on Asia medium-term growth potential.

"That doesn't mean we're going to pass on the developed world ... but I think all the experts agree that the prospects for the greatest global growth are in Asia and we want to make sure we exploit this," he said.

He denied the suggestion he had softened his tone on human rights over the years in the interest of boosting trade.

"There are obviously human rights and other specific consular cases that are of some significant concern to this government and we raise those things regularly ... and we will continue to do that," he said.

Last year Canada deported China's most wanted man, Lai Changxing, after a decades-long legal battle. Beijing accuses Lai of running a multibillion-dollar smuggling ring.

In 2007, China jailed Uighur-Canadian Huseyin Celil on terrorism charges. Celil fled China in the mid-1990s and obtained Canadian citizenship, but Beijing sees him as Chinese.

Harper's spokesman declined to comment on reports that China would agree to lend two pandas to the Toronto Zoo, but added cryptically: "I wouldn't wear your bamboo undershorts if you're coming to Chongqing."

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