Canada Critical of Venezuelan Developments

Written by Daniel Graeber for IIR News (Sugar Land, Texas)

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Summary

No longer strong allies, the Canadian government is critical of U.S. action in Venezuela. While Venezuela holds the largest deposits of oil in the world, it's Canada that supplies the most to the U.S. market.

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Canada Reminds U.S. of Venezuela's Sovereign Rights

Similarly awash in the heavy crude oil favored by U.S. refiners, a Canadian government looking for energy opportunities outside North America was critical of U.S. military action in Venezuela.

"In keeping with our long-standing commitment to upholding the rule of law, sovereignty and human rights, Canada calls on all parties to respect international law," Prime Minister Mark Carney said in a statement Saturday. "We stand by the Venezuelan people's sovereign right to decide and build their own future in a peaceful and democratic society."

His announcement followed the weekend capture by the U.S. military of Venezuelan President Nicolas Maduro on narcotics charges. U.S. President Donald Trump later conceded his country was interested in not just Venezuelan politics, but its oil riches as well.

"We're going to rebuild the oil infrastructure, which will cost billions of dollars," the U.S. president said. "It will be paid for by the oil companies directly."

Trump in his latest National Security Strategy stressed the importance of the Monroe Doctrine, put forth by President James Monroe in 1823. It holds that the U.S. should pursue a steadfast sphere of influence across all of the Americas.

Venezuela, a founding member of the Organization of the Petroleum Exporting Countries (OPEC), holds the largest deposits of oil in the world, but it is only able to produce a fraction of that given the diluting agents necessary to move its thick crude oil through pipelines. The nation's energy infrastructure also has been undergoing a steady decline for years.

U.S. refineries, meanwhile, are tailored to run the heavier types of crude oil such as Venezuela's Merey grade, and not the light, sweet crude oil found in domestic shale basins. While tensions escalated in the months before Maduro's seizure, the U.S. continued to import Venezuelan oil. Over the four-week period ending December 26, imports averaged 163,000 barrels per day (BBL/d), federal data show.

The Venezuelan energy sector appears intact, meanwhile. IIR Energy on Saturday issued a notice to clients that state-owned Petroleos de Venezuela (PDVSA), completed planned repairs at its 250,000-BBL/d Amuay refinery.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Petroleum Refining Plant database can learn more about the Amuay refinery--including capacities, investment values and necessary equipment--in a detailed plant profile.

By the Numbers

• 3.9 million BBL/d of Canada's crude delivered to U.S. refineries
• 163,000 BBL/d delivered from Venezuela
• 250,000 BBL/d Amuay refinery still operational

Canada is by Far the Top Supplier to U.S. Refiners

But it's Canada that sends most of the heavy crude oil, dubbed West Canada Select, to the U.S. Over the four-week period to December 26, Canadian deliveries to the U.S. averaged 3.9 million BBL/d.

Carney on Sunday added that he spoke with Venezuelan opposition leader and Nobel Peace Prize laureate Maria Corina Machado about the situation, but added that it was "the Venezuelan people's sovereign right to decide and build their own future in a peaceful and democratic society."

Carney already has faced Trump's ire by way of tariffs and Trump's suggestions that Canada become the 51st state in the U.S. union. In response, Carney is pressing to cut the amount of U.S. trade in half during the next decade and has courted non-U.S. partners for energy.

In oil-rich Alberta, meanwhile, the provincial government reached an agreement with federal leaders for additional expansions to the Trans Mountain crude oil pipeline to accommodate more exports to Asia.

Trans Mountain is the only network capable of directly sending Canadian oil to countries outside North America. Flows peaked in March at 793,000 BBL/d, a month after Trump announced plans to impose tariffs on Canadian energy imports. Those plans were later abandoned, though Canadian leaders have continued their pursuit of non-U.S. trade opportunities.

Carney already has announced a new partnership with Germany on critical minerals and similar deals with Sweden. Canada's low-carbon steel could find a home overseas, particularly as many governments, such as those in Europe, look to impose extra duties on carbon-intensive imports.

The U.S. refining sector, meanwhile, would be strapped without Canadian crude oil, which accounts for about 60% of total U.S. imports. Second-place Mexico only delivered 232,000 BBL/d during the four-week period to December 26, accounting for 7% of total U.S. imports.

It could take decades to revitalize the Venezuelan energy sector. But it would still be dependent on significant volumes of feedstock of diluents and a stable energy grid, at the very least, to rival Canadian volumes anytime soon.

Key Takeaways

• Venezuela produces heavy crude, but not much.
• Canada discussed recent events with opposition leader Machado.
• Canada working to cut U.S. trade in half.

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