Syed Rashid Husain Ottawa has been contesting, rather vigorously for some time now, the very stigma of 'dirty oil' labeled at sand crude from Alberta by European Union and critics such as Al-Gore. With the geopolitical scenario changing — courtesy the Ukranian crisis — a realization seems to be creeping in Brussels, that the continent needs to diversify its energy supplier base. And with Ottawa having the resources to emerge as a stable supplier to Europe, a change of heart on Canadian crude is now feasible and visible. Ottawa has been campaigning against the earlier EU proposal made last year on the premise that gasoline produced from oil sands caused 23% more greenhouse gas emissions than conventional crude. The then Canadian Natural Resources Minister Joe Oliver argued then that the European Union proposal to designate Canadian oil as dirty was erroneous and the methodology used by the EU to create its fuel quality directive (FQD) was deeply flawed. “Unfortunately, the FQD implementation measures, as currently drafted, are unscientific and discriminatory; would discourage disclosure; harm the European refinery industry, and not achieve its environmental objective,” he then said in a press release. The study also underlined that there was no scientific basis to support the distinction between conventional and natural bitumen crude oils. The measures, added the then Canadian energy minister, do not account either for the range of carbon intensities of conventional crude oil and products consumed in the EU. Things have changed since then. Canada is now on a diplomatic offensive, endeavoring to portray itself as a stable and long term supplier of energy and an alternative source to Vladimir Putin's Russia. To emerge on the global energy scene as a major player, has been a long held objective of the Harper government. Europe's souring relationship with Moscow has created a new set of opportunities for Canadian energy resources in Europe, providing Ottawa with an opening to get a foothold into the continent. Ottawa now seems to be capitalizing on the window of opportunity presented by the crisis in Ukraine. With Europe much dependent on energy supplies from Moscow to meet its needs, Brussels is definitely looking elsewhere and seeking other possibilities too. Canada could come handy in these circumstances. In his first international assignment, Canada's new Natural Resources Minister Greg Rickford was in Rome last week, underlining the country's formidable gas and oil assets before G7 energy ministers. “At a time where many countries are faced with the dual challenges of increasing demands for energy and an unstable energy supply, Canada is a reliable, secure and responsible source of energy,” Rickford said after meeting the G7 ministers. “Our government is committed to expanding markets for our energy products to Asia and Europe, creating jobs and prosperity for Canadians. Canada will collaborate fully with its G7 and global partners in bolstering energy security and global stability,” Rickford said. The emerging scenario has also forced Europe to alter its position on sand crude from Alberta. Previously the European Union had termed Albertan oil sands as one of the dirtiest forms of oil, underlining in rather broad terms, that its proposed fuel quality directive could effectively make Canadian crude unwelcome in European refineries. Realpolitik however, is forcing a change in heart as evident when Rickford spoke after interacting with his G7 counterparts. “I feel better about it now than perhaps we have at any point in time,” he said. “It was a very positive signal from the G7 energy ministers I met with. My discussion with European Union Council Representatives again [gave] a strong signal that this was moving in the right direction for Canada." Canadian plans to build liquefied natural gas projects and crude oil pipelines from west to east was received with “enthusiasm” by his G7 counterparts, he added. On the sidelines of the G7 energy summit, Canada and Italy signed a joint statement to collaborate “on enhancing the production, transportation and trade of energy products, including oil and LNG, amongst the Canadian, Italian and broader European markets including the development of infrastructure.” Rickford also discussed collaboration on oil and LNG export with his Japanese counterpart, Toshimitsu Motegi. Canada has resources. No questions about that. Yet, the infrastructure to ship this precious resource to markets is missing. And that is the problem. And thus, despite the positive signals, the issue remains; can Canada move ahead to fill in the gap and capitalize on the opportunity. And the answer seems a clear no — at this moment. And everyone agrees to it. A House of Commons natural resources committee — hearing evidence on whether there are opportunities for Canada to export oil and gas to Europe and help wean Ukraine off its dependence on Russian energy — was told by energy experts from Alberta, Europe, and Ukraine that Canada would not be able to feed Europe in the shorter run. The committee was told that Canada is the better part of a decade away from having the pipelines and other infrastructure necessary to be any kind of meaningful energy supplier to Europe. The testimony offered a sobering counterpoint to the Harper government's public enthusiasm about increased Canadian energy exports to Europe. German Chancellor Angela Merkel too appears unenthusiastic about the prospect. When she hosted Prime Minister Stephen Harper in March, she publicly noted that Canada lacks the infrastructure to actually move the products. Minister Rickford too acknowledged that Canadian energy could not reach European shores before 2020. “We have what I believe is an appropriate, responsible timeline for 2020,” the minister said. Geoff Hill, an oil and gas expert with Deloitte Canada, told the MPs, "we're still left with a very serious infrastructure deficit." "The most aggressive estimates to supply gas to Europe is around five or six, or eight years, during which time we have to be exceptionally busy building the needed facilities, none of which we are currently building at the required pace." Michael Edwards, a policy analyst with Fairweather Hill, echoed the assessment. The best bet would be for Canada to ship liquefied natural gas across the Atlantic, but there isn't enough Canadian gas available on the East Coast to justify further investment in LNG plants, he said. That could change if more pipelines could bring more gas into the region, "but that's a five- to 10-year prospect," Mike Blanchfield of Canadian Press quoted Edwards as saying. Canada needs to do some serious work, before it could contemplate to be a serious, long term, global player on the global energy scene. Interestingly, despite all the claims and the counter offensive, activity on ground to build the infrastructure and be ready over the mid term, seems still missing.
