According to WPB, Canada possesses significant reserves of oil and natural gas, but currently produces considerably less than Russia.
The head of the G7 Research Group, a political science professor at the University of Toronto, recently stated that G7 members should completely ban imports of Russian energy—including crude oil, coal, natural gas, and uranium. With the world’s fifth-largest oil reserves and ranking among the top three uranium producers, Canada could help fill this gap. But can Canada truly replace Russia on the global energy stage? That may be a difficult task.
Both Russia and Canada rank among the world’s top five oil producers. Russia is the third-largest oil producer, while Canada holds the fourth position. The United States and Saudi Arabia occupy the first and second spots, respectively.
Russia produces over 9 million barrels per day and has the capacity to exceed 10 million barrels daily. In contrast, Canada produces around 5 million barrels per day. This is a key reason why John Kirton’s statements are met with skepticism. For a country producing 5 million barrels daily, physically replacing a country that produces nearly double that amount seems implausible. It’s an interesting situation because Canada certainly has the resources to do it: with 171 billion barrels in reserves—mostly oil sands—it ranks third globally. By comparison, Russia holds less than half that amount, around 80 billion barrels. However, politics and pricing also play a role, and the question remains whether Canada could hypothetically ramp up production to match Russia’s output.
Canada has a poor reputation when it comes to bureaucratic hurdles in the energy sector. Several successive Liberal governments have attempted to suppress the industry with stricter environmental regulations, increasing production costs and generally making operations more difficult. Still, despite tighter regulatory restrictions, Canada continues to produce more oil.
Most of Canada’s crude oil is exported to its neighbor, the United States, due to the geographic ease and economic logic of this route. Nearly all of Canada’s oil goes there. However, recently, officials in Ottawa have begun to consider diversification as a potentially beneficial strategy.
The main direction for diversification is Asia. Europe does not yet import crude oil from Canada, nor does Japan—but Japan is open to importing Canadian liquefied natural gas (LNG). Therefore, replacing Russia as the G7’s energy supplier, while theoretically possible in terms of reserves, is operationally challenging. Canada would first need to significantly increase production. To do that, the government would need to step back from its net-zero plans, which include stricter energy sector regulations.
According to OilPrice, the natural gas situation is similar—but this time, the scale of reserves favors Russia. Russia holds the world’s largest gas reserves, followed by Iran, Qatar, the U.S., and Saudi Arabia. Canada is not among the top ten. But reserves aren’t the most important factor for exports—export infrastructure is. Russia has half a dozen operating LNG plants, albeit under sanctions, and is building more. Canada hasn’t yet completed its first LNG facility. To become a global gas player, Canada needs more of these plants to compete with the U.S., the world’s largest LNG exporter.
So, while Canada certainly has the natural resources to become a serious global force, turning those resources into exports capable of replacing one of the dominant players in the market is complicated by government policies—and will also take time. Ignoring this reality benefits no one, least of all the G7.
By WPB
Oil, Petroleum, Crude
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