Canada is a weak player in the "global energy game" and needs to improve its performance by selling more oil to China and Asia, warns one of Prime Minister Stephen Harper's most trusted former cabinet ministers.
"For Canada, that is obviously where the future has to be," said Jim Prentice, a senior banking executive who used to hold the industry and environment portfolios in the Conservative government.
"This hard new reality that we are facing — the so-called global energy game — is one that we are forced into, and frankly one that we are not yet playing with sufficient skill, foresight or cohesiveness."
The energy industry is being radically transformed, and Canada has to diversify its energy market beyond the United States where 99 per cent of our energy exports now go, said Prentice.
Canada is affected by the fact that the U.S. is well on the way to becoming the world's largest oil producer and achieving energy self-sufficiency, said Prentice, who was giving the keynote address at a forum on Canada-U.S. business relations in Ottawa sponsored by the Canadian American Business Council.
Canada needs new customers because it is selling its oil at 35 per cent less than the going global rate, he said.
"That makes us a price-taker, not a price-maker."
Moreover, Prentice said, when the U.S. administration decided to delay the construction of the Keystone XL pipeline that would have carried Alberta oilsands crude to the U.S., there was nothing Canada could do about it.
All of that amounts to a major vulnerability for Canada's economy, said Prentice, now an executive at CIBC.
Keystone pipeline just one issue
Prentice played down the importance of the stalled Keystone XL deal — which could be approved next year — as well as the $15.1-billion bid by China's state-owned CNOOC to buy Calgary-based Nexen Inc.
Canada's energy future is bigger than one pipeline deal, said Prentice, and while CNOOC-Nexen "is a big deal, it's important, it's not the main issue."
Harper was to address the group and participate in a question-and-answer session later in the day.
Harper has made selling energy to Asian markets a priority after the rejection of the Keystone XL pipeline. U.S. President Barack Obama delayed the project after massive environmental protests in what was an election year.
Harper has said that while he understood the realities of U.S. electoral politics, Canada needed to look elsewhere for energy customers.
The prime minister has branded Canada an "energy superpower."
But Prentice appeared to upbraid his old boss when he told the gathering, "mere ownership does not make you an energy superpower."
Earlier at the event, Gary Doer, Canada's ambassador to the United States, affirmed the world's largest two-way trading relationship, saying Canada will never forget its best customer even as it tries to broaden trade with Asia.
The two countries are ready to pursue a wide agenda on trade, energy and the environment, said Doer, who noted Canada and the U.S. have a lot of business beyond just Keystone.
U.S. Ambassador David Jacobson said his country isn't worried about Canada increasing exports to Asia, including China, because many of those exports are American-made products.