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EDMONTON \u2014 Two political scientists say U.S. President Donald Trump\u2019s interest in transforming Venezuela\u2019s oil-rich sector hasn\u2019t created panic or shaken up Canada\u2019s oil industry.<\/p>\n
Heather Exner-Pirot, director of energy, natural resources and environment with the think-tank Macdonald-Laurier Institute, said the U.S. president first needs to get through the global political unrest his Saturday capture of Venezuelan President Nicol\u00e1s Maduro has created.\u00a0<\/p>\n
\u201cWe\u2019ve always known that Venezuela is a competitor and has those resources, but obviously they\u2019ve been marked by corruption, violence and their assets and their production has atrophied,\u201d she said in a Sunday interview.<\/p>\n
\u201cJust because they have oil in the ground doesn\u2019t mean that they can get it out logistically, so I don\u2019t think anyone in this (sector) is immediately panicking.\u201d<\/p>\n
And she said Secretary of State Marco Rubio\u2019s backtracking on Trump\u2019s claims on Sunday that he will \u201crun\u201d Venezuela, which made it seem oil will be produced faster, signals that Trump\u2019s threat was just that \u2014 a threat.<\/p>\n
Rubio said the United States would not take a day-to-day role in governing Venezuela and would enforce an existing \u201coil quarantine\u201d on the country that was already in place on sanctioned tankers.<\/p>\n
The state-owned oil company Petr\u00f3leos de Venezuela S.A., or PDVSA, has been largely locked out of global oil markets by U.S. sanctions. It sells most of its exports at a steep discount on the black market in China.<\/p>\n
\u201cWe continue with that quarantine, and we expect to see that there will be changes, not just in the way the oil industry is run for the benefit of the people, but also so that they stop the drug trafficking,\u201d Rubio said Sunday.<\/p>\n
Trump hopes to convince American companies to invest in and revitalize Venezuela\u2019s oil industry.<\/p>\n
The U.S. has been imposing sanctions on Venezuela since 2005 over concerns about corruption as well as criminal and anti-democratic activities. The first Trump administration expanded the penalties to oil, prompting Maduro\u2019s government to rely on a shadow fleet of falsely flagged tankers to smuggle crude into global supply chains.<\/p>\n
Rory Johnston, an oil market analyst who teaches at the University of Toronto and is the founder of market research firm Commodity Context, said it\u2019s unclear whether Trump\u2019s pressure campaign will increase the country\u2019s oil production, and bring prosperity for the Venezuelan people and create competition for Canada\u2019s oil sector.<\/p>\n
He said American oil companies want a stable regime in the country before they invest.<\/p>\n
\u201cWe don\u2019t know a lot about what\u2019s actually coming down the road in Venezuela because Venezuela\u2019s most important sector is oil, but there\u2019s a lot more going on than just oil,\u201d he said.<\/p>\n
\u201cIf this became more like an insurgency situation, that even further complicates the situation for international oil companies wanting to invest in Venezuela when they could have guys jumping out of the jungle with machine-guns. It\u2019s just a very, very different situation.\u201d<\/p>\n
Johnston said if American companies increase oil production in Venezuela, competition between Canadian and Venezuelan barrels will grow.<\/p>\n
\u201cVenezuelan oil has a much more natural home in U.S Gulf Coast refineries because it\u2019s right there,\u201d he said.<\/p>\n
Exner-Pirot noted that the U.S. Gulf refineries are well optimized for Venezuela\u2019s heavy oil because she said they were built at a time when they were relying on Venezuelan heavy oil in the 1970s. But as political turmoil shrunk Venezuela\u2019s production, Canadian oil began to fill the gap.<\/p>\n
However, she said getting replaced at those refineries won\u2019t hurt Canada\u2019s oil sector in a huge way.<\/p>\n
\u201cMost Canadian heavy oil goes to the Midwest and it\u2019s sent there directly by a pipe and there\u2019s no really easy way to get Venezuelan oil into the Midwest,\u201d Exner-Pirot said, although it could knock down the cost of Canadian barrels by a few dollars.<\/p>\n
Both experts said Canada\u2019s oil sector can be prepared for a hit by maintaining its competitiveness.<\/p>\n
\u201cThis is a good reminder that Canada is always competing with other sources of oil in global markets. And whether it\u2019s Venezuelans, OPEC or Russian oil, we always have to be competitive,\u201d Exner-Pirot said.<\/p>\n
Johnston said Prime Minister Mark Carney and Alberta Premier Danielle Smith have been heading in the right direction in recent months by turning their attention to finding ways to get Canadian oil to new markets, diversifying the sector and ensuring Canada remains competitive.<\/p>\n
\u201cIt really further bolsters the case for a West Coast pipeline. It\u2019s positive news for Smith\u2019s project, but it\u2019s obviously under very negative circumstances,\u201d he said.<\/p>\n
\u201cWhat\u2019s happened in Venezuela has once again awakened people to the risks we\u2019re talking about and the type of government we are dealing with. And we need to be very serious about foreseeing ourselves against that risk.\u201d<\/p>\n
\u201cWe should export oil and invest in clean technologies in order to reduce our own dependence on fossil fuels,\u201d he said.<\/p>\n
\u00a92025 The Canadian Press<\/strong><\/p>\n<\/p><\/div>\n