Canada can easily replace Saudi Arabian crude oil, economist says
CALGARY – Canada can easily replace the oil it imports from Saudi Arabia should relations with the Middle Eastern kingdom deteriorate to the point that trade in crude is halted, says an energy economist.
Eastern Canadian refineries import about 75,000 to 80,000 barrels per day of Saudi Arabian crude, said Judith Dwarkin, chief economist with RS Energy Group in Calgary.
That’s less than 10 per cent of total imports and amounts to a “drop in the bucket” compared with the United States, she said, which accounts for two-thirds of imports and could easily cover Saudi’s share thanks to growing domestic production.
It is also dwarfed by the 3.5 million barrels per day of Canadian oil that Canada exports mainly to the U.S.
“The Saudis, if they choose to supply less to Canada, will divert those barrels, possibly to China, and U.S. barrels that would have gone to China, but are uncompetitive under Chinese tariffs, come to Canada,” Dwarkin said.
“Basically, the cupboard gets rearranged.”
Saudi Arabia declared a freeze on new trade with Canada and recalled thousands of students attending Canadian universities following a tweet last week from Global Affairs Canada that expressed concerns about the arrest of activists in the kingdom.
The Saudi foreign ministry has also ordered Canada’s ambassador, Dennis Horak, to leave the country.
According to the Canadian Trade Commissioner Service, Canada exported $1.45 billion worth of products to Saudi Arabia in 2017, with about half in the category of vehicles and equipment at $760 million.
The federal office says Canada imported $2.6 billion worth of goods from Saudi Arabia, with $2.5 billion of that in mineral production.
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A handful of Canadian companies operate in Saudi Arabia and could potentially be affected by the ongoing trade battle.
Precision Drilling Corp. of Calgary has about 900 employees working between Kuwait, where it has five active rigs, and Saudi Arabia, where three of its four rigs in the country are currently active, the company confirmed.
A spokesman refused further comment.
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SNC-Lavalin says on its website it has had a 24-year relationship with Saudi Aramco, the national Saudi Arabian oil company, providing general engineering services for their oil and gas facilities.
Armoured tanks and personnel carriers have been Canada’s biggest recent export to the kingdom. A London, Ontario-based firm called General Dynamics Land Systems signed a $15-billion deal with Saudi Arabia in 2014 to export its light-armoured vehicles to the kingdom.
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