Business Edge
Canada needn't fret about China breathing down its neck for energy riches - in fact, Canadian oil, nuclear and renewable-energy players ought to be doing more to fuel the dragon's fire, an expert on the Asian giant says.
Noting that "China is not a threat, nor a pure opportunity," Wenran Jiang, director of the China Institute at the University of Alberta, is warning the Canadian government and the energy industry that they must make China more of a priority or risk losing out on potential billions in future business.
"We're looking at a total trade volume (between Canada and China) of $30 billion compared with $500 billion between Canada and the United States. Among that total, energy is even smaller - we're looking at numbers ranging at only a couple billion," including all memorandums of understanding and China's acquisition of Canadian energy assets, Jiang told a recent Insight oilsands conference held in Calgary.
Jiang says Canadians should be looking at all aspects of energy, including oil exports and technology transfers, to help develop China's domestic industry, natural gas storage and pipeline technologies, and environmental know-how, all areas where Canada excels and where the Chinese need help.
"I think we need to engage China in different ways, and not just with traditional oil, but with other energy sources," he says.
Coal remains China's main fuel source, of which it consumes 190 million tonnes per year, accounting for roughly 70 per cent of the total power produced in the country.
To fuel the expanding economy - which China hopes to quadruple by 2020 - and to improve its environmental record, the country is looking to a number of energy sources such as nuclear, hydro and wind.
Jiang said nuclear represents just 1.4 per cent of the total energy supply and the Chinese plan to spend about $40 billion US in the next 15 years to build more than 30 nuclear reactors, an average of two per year. China recently announced it aims to invest $150 billion over this same period in renewable energy.
"These are very large numbers," Jiang noted.
In an interview with Business Edge following his speech at the conference, Jiang said he has no doubt a Conservative government would support an open market and encourage investment in Asia, but added he believes Stephen Harper will pursue much closer ties with the U.S. - as opposed to Martin, who played the China energy card in trade disputes with the U.S.
Outgoing Natural Resources Minister John McCallum noted last fall that China's investment appetite for the Alberta oilsands could result in that country importing 400,000 barrels of oil a day from Canada within the next seven years.
There have been a few big energy developments between Canada and China over the last year. Last spring, Canadian pipeline giant Enbridge Inc. signed a preliminary deal with PetroChina to anchor a new, $2.5-billion oilsands pipeline to the West Coast. From there, crude would be shipped on tankers to Asian markets, including China.
Also last spring, Hong Kong-based China National Offshore Oil Corp. (CNOOC) purchased 17 per cent of privately held Canadian oilsands company MEG Energy Corp. for $150 million, and then a month later, Chinese refiner Sinopec Group paid $105 million for a 40-per-cent stake in privately owned Synenco Energy Inc.'s Northern Lights oilsands project.
While significant, these investments represent a mere splash in the egg-drop soup. Over the past few years, China has been busy signing multi-billion-dollar deals with Africa, Iran, Indonesia, Australia and Venezuela, to name a few.
"(Canadians) are looking at hundreds of millions rather than billions within the energy sector, and considering Canada's position in terms of energy potential, that number's small," Jiang added.
"What about a U.S. slowdown in the future or other trade issues Doesn't Canada want to have more of a balanced market around the world rather than depending on the United States And if you look at the future of oilsands development, I think there's a necessity to build a pipeline and move it to the Pacific Ocean and then move it to Asia."