By Ovunc Kutlu
ANKARA
Canada must improve its energy production infrastructure through pipeline projects and also explore new investments in liquefied natural gas if it is to remain a major player in global energy markets, warned a report by international bank HSBC.
The report released on Tuesday by the British multinational banking and financial services company said that Canada's domestic energy consumption was projected to grow at a slower rate than its future energy production, paving the way for an opportunity to export excess energy.
HSBC's Canada Trade Forecast Report said: "If Canada can install the necessary infrastructure, it will be well placed to become a global exporter of oil and LNG (liquified natural gas).
"Canada’s domestic production of fossil fuels will continue to outpace domestic demand. This means that Canada has ample potential to ramp up its energy exports beyond its current key U.S. market."
Currently, 97 percent of Canada’s oil exports go to the U.S., which is expected to grow by 7 percent a year between 2014-16, according to the report.
According to the U.S. Energy Information Administration (EIA): "Canada is one of the world's five largest energy producers and is the principal source of U.S. energy imports, while it is the world's sixth-largest oil producer, and virtually all of its crude oil exports are directed to U.S. refineries."
- Project postponed
Oil demand and oil prices are predicted to rise in 2015, which will support Canada's overall economic performance, as petroleum products will contribute the largest share, nearly 50 percent, to Canada’s increase in exports between 2014-16, said the report.
Petroleum products are forecast to decrease more than 20 percent between 2017-20 as Canada's infrastructure capacity remains questionable because of its trade geography and constraints on its pipeline projects.
The proposed Keystone XL pipeline project that will run from Alberta, Canada, to Texas in the U.S., faced criticism from environmentalist groups before it was indefinitely postponed by the Obama administration on April, thus halting the project after it was commissioned in 2010.
However, if Canada can install the necessary infrastructure through ongoing and planned pipeline projects, and with new investments in LNG capacity, it can become a global exporter of oil and LNG, the report said.
"Canada is the fourth-largest exporter of natural gas, behind Russia, Norway, and Qatar. Though Canada has plans to export liquefied natural gas (LNG), all of Canada's current natural gas exports are sent to U.S. markets via pipeline," according to EIA.
"Europe will also see stronger growth of energy imports from Canada, although the region still accounts for a relatively small share of Canada’s total energy exports," the report said, adding that "petroleum exports to the UK are forecast to grow by 11 percent a year in 2014-16 and by 9 percent a year over the medium term, but the UK will still account for less than 1 percent of Canada’s total petroleum exports even in 2030."
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