Fatih Birol, executive director of the International Energy Agency, will meet with Prime Minister Mark Carney and other ministers this week to discuss the global energy crisis stemming from the U.S.-Iran conflict.LUDOVIC MARIN/AFP/Getty Images
Canada needs to accelerate energy infrastructure projects to take advantage of a rare opportunity to significantly increase its exports amid a global reckoning on energy policy caused by the war in Iran, the head of the International Energy Agency said ahead of a trip to Ottawa.
Fatih Birol will be in the capital this week to bring that message to Prime Minister Mark Carney and various other ministers, including Tim Hodgson at Natural Resources and Finance Minister François-Philippe Champagne, in a series of meetings about the energy crisis that is hobbling global markets.
Tehran’s closing of the Strait of Hormuz, a vital shipping route for oil and gas, has choked off around 20 per cent of the world’s supplies since the United States and Israel began their bombing campaign against Iran on Feb. 28. The crisis has ripped more than 14 million barrels a day from the world market, and 110 billion cubic metres of gas.
The extreme shortages that have materialized as a result – particularly in Asia-Pacific markets that largely rely on oil from the Middle East – will leave a long-lasting mark on the global energy sector, no matter when the conflict ends, Dr. Birol said in an interview. And they have already kicked off a major reset of energy markets.
Oil and gas aren’t the only two commodities now missing from world markets, Dr. Birol said, so are “trust and predictability.”
And that’s where Canada comes in.
As countries re-examine their energy policies – from where they source their oil and gas to the pace of electrifying their economies – Canada has a “once-in-a-generation opportunity” to move from being a country with significant and varied energy resources resources to being a major exporter, he said.
But sluggishness will hamper Canada’s success.
How the conflict in Iran is reshaping how the world sources its oil
Dr. Birol made his comments as Ottawa and Alberta discuss options for a pipeline to the West Coast, stemming from the energy agreement the two governments signed in November.
Alberta and Ottawa have reached agreement on two of four provisions that were to be finalized by April 1: streamlining environmental impact assessments and cutting methane emissions by 75 per cent from 2014 levels by 2035. But two other objectives in the memorandum of understanding, involving the thorny issues of carbon pricing and a CO2-capture project in the oil sands, remain unresolved.
It’s not just a potential pipeline that Canada’s government must get a move on, Dr. Birol said, “it’s everything.”
That includes nuclear projects and supplying the world with the uranium needed to power the sector, the extraction, refining and processing of critical minerals, and bolstering oil and gas exports.
Countries will choose their energy partners “much more carefully at this time,” rather than looking solely at prices and what they have done in the past. “They will also look at the reputation and the risks of their energy partners.”
From his many recent conversations with global leaders, Dr. Birol said the future of energy supplies will include new supply routes and suppliers, and North America is one of the key regions being considered.
Oil exports from North America are already surging amid the conflict in Iran, hitting record highs in the U.S. as countries that usually rely on barrels currently blockaded in the Strait of Hormuz scramble to find alternative supplies.
Last month, the U.S. became a net exporter of crude oil for the first time since 1944. Its exports have almost doubled since late March, hitting an average of 6.4 million barrels per day for the week ended April 24, according to the country’s Energy Information Administration, marking the highest weekly level on record.
Here in Canada, exports out of Vancouver increased by 60 per cent in April compared with February, according to shipping data firm Vortexa.
As Canada works to expand its export footprint, instilling trust and making energy from the country synonymous with quality and reliability must be core to its strategy, Dr. Birol said, so that customers are confident that “even in a crisis, Canada will continue to deliver.”
Canada must also deepen current trade relationships, he said, and invest in new, long-term partnerships.
“When I look at the world, the energy-hungry world, it needs Canada more than ever. And I believe Canada also needs the world.”
Mr. Carney was in Armenia this past weekend for the European Political Community Summit in Yerevan, marking the first time a non-European leader has joined the gathering.
During bilateral meetings with the leaders of Armenia, France, Italy, Poland, Spain, Ukraine, the European Council, the European Commission and the European Parliament, Mr. Carney positioned Canada “as a premier destination for global capital and investment” including in critical minerals, energy and defence, according to a news release from his office.
“In a more dangerous and divided world, a stronger partnership between Canada and Europe will create more stability, more security, and more prosperity on both sides of the Atlantic,” he said in a statement.