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Alberta Premier says that Canada's pipeline project attracts Middle Eastern and Asian interest

Middle Eastern and Asian investors have shown early interest in a new crude oil pipeline project in Canada. They could become minor owners of the project, said Alberta Premier Danielle Smith on Monday. Alberta, Canada's main oil-producing province, has been exploring the feasibility of a new one-million-barrel-per-day crude oil pipeline to British Columbia's northwest coast to increase exports to Asia, but no private-sector company has committed to building a new pipeline yet.

Canadian oil companies are hoping to increase sales in Asia over the next few years in order to diversify their business away from the United States. The United States currently purchases 90% of Canada's oil, in part because of the ongoing tensions that have arisen between the two long-time allies following the return of Donald Trump to the White House.

Smith told reporters in Houston at the CERAWeek conference by S&P Global that global energy investors were increasingly interested in Canada as a haven from the geopolitical turmoil and the war in Iran. The Iran War has increased global demand for Canadian oil and gas. Last week, Canada committed to supplying the International Energy Agency with 23.6 million barrels of oil from its domestic producers.

She said Alberta had been in contact with Middle Eastern sovereign funds, as well as Asian investors. She expects that foreign capital will emerge if Canada approves the federal fast-track for a new pipeline. "Probably not the majority stake but at least substantial stake." Smith replied, "Maybe 15 or 30 percent."

Smith stated that the Alberta government would submit a formal proposal for a pipeline to the federal government by June. She said that if the project was approved for fast-tracking it would increase the chances of a private sector sponsor coming forward. Political and regulatory obstacles have plagued previous Canadian pipeline projects that were intended to increase the country's capacity for oil exports. Prime Minister Mark Carney promised to change this, promising a clear and effective approval process which will allow a new pipeline to be built and financed by private investors.

Smith stated that while regulatory certainty is essential, the success of a new oil pipeline depends on the outcome of ongoing negotiations on carbon pricing policies between Alberta, Canada, and the oil sands sector.

Carney's government has pledged to strengthen Canada’s industrial carbon pricing system. However, Smith argued that Canada's oil companies cannot increase production under the new system, which would put them at a disadvantage against their U.S. competitors. Alberta and the federal governments committed to a deal on carbon pricing this fall. A report published last week quoted industry sources saying that a deal would not be reached by the April 1 deadline because Canada's oil-sands companies were pushing back on the federal proposal. (Reporting and editing by David Gaffen in Houston, Amanda Stephenson)

(source: Reuters)