TORONTO: Shipments of energy products including bitumen from Alberta’s oil sands, the world’s third largest oil reserve are the largest component of Canada’s exports. Almost 97% of Canada’s crude oil exports are shipped to the US, According to Statistics Canada.
Crude oil exports account for a large portion of the US currency that’s earned by Canada. As a result, any movement in crude oil’s price and volume would have a significant impact on the foreign currency flow into the Canadian economy.
Canadian imports increased by 205,000 barrels per day, or bpd, to 3.3 million barrels per day, or MMbbls/d, in the week ending February 6, 2015 according to the EIA’s (U.S. Energy Information Administration) data. It indicated a 21% increase from last week.
With the changing oil industry dynamics, the Canadian oil industry will also be challenged. In its latest report, the IEA (International Energy Agency) predicted that Canada’s oil production will grow 20% from the current levels to just under 5 MMbbl/d by 2020. That indicates 430,000 bpd less than the previous forecasts. However, if oil prices don’t recover at a faster growth pace, the estimates would be slashed further.
Although there are pipeline constraints, Canadian crude already started to reach refineries in China, India, Southeast Asia, and Europe. The IEA commented that this is expected to become more frequent over the forecasted period. Canadian crude, including re-exports from the US, will likely reach Pacific Basin markets by rail or ship if the economics support it.
The agency also stated that least one of the planned pipelines will be approved and completed before the end of the forecast. Canadian exports could increase steeply. It would impact crude tanker companies like Frontline Ltd.
