Help for Canadian oilpatch coming in 'hours, possibly days,' finance minister promises
'The energy sector is in a particularly challenging situation,' Bill Morneau tells senators
Help for Canada's oil and gas sector is "hours, possibly days" away, federal Finance Minister Bill Morneau said Wednesday, as the industry continues to slash spending plans by the billions of dollars.
"The energy sector is in a particularly challenging situation," Morneau said.
The minister said Ottawa has been in daily contact with provincial governments to discuss those issues and how it is impacting provincial revenues.
"We're also in hourly contact with the energy sector to think about how we can bridge the time by providing some sort of appropriate credit opportunities for them — and that is work that is going on right now," he said.
"I don't have the final answer on the exact hour that that will be delivered, but I'm not talking about weeks. I'm talking about hours, potentially days, that we can ensure that there's credit facilities for especially the small- and medium-size firms in that sector."
Morneau did not discuss how the federal government would do this.
Energy spending slashed by up to estimated $6.5B
He said the 10 largest companies in the oil and gas sector have existing credit relationships with their banks and, in most cases, have available credit.
"But they are under strain, too," he said. "So we're also looking at individual issues in that sector. Those are all important."
Canada's oil and gas sector is being hit with the fallout of plunging crude prices linked to a market share battle between Saudi Arabia and Russia, and lower demand because of the COVID-19 pandemic
On Tuesday, Bloomberg News pegged the amount of money that Canadian energy companies have slashed in capital spending for the year at between $5.3 billion to $6.5 billion.
Service companies face 'critical' cash flow
The impact of those cuts will be felt by front-line workers.
"You've seen how producer companies who are our customers are cutting back on their capital budgets and their expenditures," said Gary Mar, president of the Petroleum Services Association of Canada.
"That means that there is not work for employees of our member companies."
While oil producers might still generate cash flow from selling oil or gas, services companies do not, he said.
"That is a critical issue," Mar said. "Liquidity for these companies will be a big issue for governments in determining how we can recover from some circumstances we find ourselves in."
Mar said he has spoken with Morneau's office about the industry's concerns.
Injecting government money into the banking system so loans can be extended to businesses would be something that could help with recovery, Mar said. But there is no single tool to fix everything, he added.
Environmental groups watch Ottawa closely
The oil and gas sector isn't the only one watching for Ottawa's next move. Any financial help for the industry will also draw the scrutiny of environmental groups.
On Tuesday, a number of health, faith, environmental, labour and social justice groups wrote to Prime Minister Justin Trudeau, urging him not provide any more new money to companies, only to workers.
They say Ottawa should not bail out the sector by offering share purchases or loan guarantees.
"This is a crucial tipping point, and climate change must factor into all of our decision-making," Dr. Courtney Howard, board president of Canadian Association of Physicians for the Environment, said in a statement.