Norman Steinberg is global chairman of Norton Rose, an international legal practice with 2,900 lawyers in 43 offices world-wide. Derek Burney, senior strategic advisor at Norton Rose, has held many senior positions in the public and private sectors, including serving as Canada’s Ambassador to the United States from 1989 to 1993. Norton Rose focuses on six key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and pharmaceuticals and life sciences.
What are the risks to Canada of having only one export market – the United States – for its petroleum products?
Norman Steinberg: In any business, having one customer is never a good business practice. The issue over President Obama’s decision to not proceed with the Keystone XL pipeline demonstrated how precarious it is for Canada to be over-reliant on the U.S. market. The Canadian discount on oil is partly a product of our reliance on one market.
Derek Burney: The risk of having a single market for exports of petroleum, or any other product, is that it makes Canada vulnerable to unilateral actions by the importer that may curtail such exports. This is precisely what the presidential veto of Keystone XL highlighted. As well, by being a “captive” exporter of oil to the U.S., we are a price-taker, not a price-maker, in that market. Recently, this has meant that our oil sells at a 20 to 25 per cent discount to world prices.
How will opening new markets in Asia for Canadian oil and natural gas improve energy security for this country?
NS: It will ensure that Canada can source more capital to accelerate the development of our oil and gas resources.
DB: By making more of our oil accessible to Canadian consumers, via pipeline distribution to the East Coast, we would ease our dependence on imported oil and have the capacity to diversify our export base.
What are the advantages and disadvantages, when it comes to energy security, of allowing greater Chinese investment in Canada’s energy sector?
NS: We see this as advantageous, because it allows new capital to help develop our resources, and creates a new market so that we are not simply reliant on the U.S. for our oil and gas exports. And this development by Chinese investment will afford Western Canada access to other Asian markets as well.
DB: Canada needs – and should welcome – foreign investment to develop its resource base. Some have estimated that $650 billion, much of it foreign, will be needed by the end of this decade. Investors from China, as well as many other countries, are already active in several of our natural resource sectors. The government has indicated most recently that it is considering new guidelines for investments by state-owned enterprises, and it remains to be seen what implications this will have for additional investments from China. Both diversification of export markets and a competitive market for investors can serve the national interest.
What is Canada’s role in bolstering energy security for North America as a whole?
NS: Many people believe that the U.S. is overly reliant on supply from certain sources that are not friends of the U.S. Increasing the development of Canada’s oil and gas resources and exporting more of these to the U.S. is a strategic advantage not only to Canada but also to the U.S.
DB: Reliability or security of supply, based on proven reserves and efficient technologies for development, are advantages that Canada offers not just to North America but to the global economy.