Author: Russia's massive resource wealth means world cannot cut it off entirely
Ukraine's new ambassador to Canada issued a call Wednesday to Canadian oil and gas companies to help in the fight against Russia by entering and expanding into the European market.
Yulia Kovaliv made the remarks at the Global Energy Show in Calgary, one day after presenting her credentials to Gov. Gen. Mary Simon in Ottawa and formally assuming the ambassadorship.
Kovaliv, whose speech was met with a standing ovation, thanked the government of Canada and Canadians for their support of her country since Russia launched its unprovoked invasion on Feb. 24.
She said Europe needs Canadian energy to help replace the barrels that will be lost by 2023 when an EU embargo on Russian oil comes into effect.
"That is a big move," Kovaliv said of the EU embargo, which was announced June 1. "It will be a significant challenge for the overall European continent."
According to the U.S. Energy Information Administration, Russia was exporting 7.8 million barrels per day of crude oil at the end of last year with 60 per cent of those exports going to Europe.
As a result of the war and the EU embargo, Russian oil production is expected to fall around 18 per cent from 11.3 million barrels a day to 9.3 million barrels a day by the end of next year, the EIA says.
The European Commission — the executive arm of the EU — has unveiled a US$315 billion plan to break away from reliance on Russian energy, a plan that includes everything from investments in energy efficiency to the build-out of wind, solar and hydrogen power.
The plan also includes securing new sources of fossil fuels in the short and mid-term future.
"Canadian companies, we do think, should take the opportunity to enter and expand in the EU market," Kovaliv said.
Canada's oil and gas industry has previously said it can hike output by the equivalent of 300,000 barrels per day by the end of the year to help displace Russian fossil fuels in Europe.
However, that would help to replace less than five per cent of Europe's gas imports from Russia and less than 10 per cent of its Russian oil imports.
Canadian oil and gas producers are enjoying record profits right now due to skyrocketing commodity prices. But the industry as a whole has so far been reluctant to significantly ramp up capital spending, preferring instead to pay down debt and pay dividends to shareholders.
The industry is also struggling with a labour shortage, which is impeding efforts to quickly ramp up capacity.
Canada also lacks the infrastructure to ship any oil or gas to Europe directly. Instead Canadian barrels will have to travel through existing pipelines to the United States and then be shipped out through the Gulf of Mexico.
Federal Natural Resources Minister Jonathan Wilkinson has previously said Canada is `"very open to the discussion'' about what else it can do to help, including the possibility of new terminals on the East Coast to export Canadian liquefied natural gas to Europe.