On June 8 2017, Natural Resources Minister Jim Carr expressed that Canada is open to Chinese investment in its oil sands sector, after foreign investment declined by $22.5 billion in the last year alone. This comes at a time both countries are engaging in exploratory talks on the feasibility of pursuing a Free Trade agreement, which would ease bilateral restrictions on trade and investment.
The oil and gas sector suffered tremendously in the last few years, amid tumbling oil prices which declined from $100/barrel in early 2014, to a low of $30/barrel in early 2016. They slightly rebounded to around $50/barrel early this year, amid OPEC’s production cut, but have zigzagged in recent months, hovering between $45-50/barrel as investors remain torn between OPEC’s efforts to drain global oversupply and rising US shale production. This had a significant impact on investment in the Canadian oil sands sector. In addition to the $22.5 billion decline last year, a 2016 report by the Canadian Association of Petroleum Producers estimated a $50 billion or 62% decrease in capital investment in Canada’s oil and gas sector since 2014.
Such easing of restrictions on Chinese investment in the oil sands, if realized, could potentially benefit both countries. It can potentially open the door to a critically needed source of financial stimulus to the embattled sector and provide Canadian companies with new technologies that would be vital in the creation of an efficient and sustainable future. This comes at a time where Albertan support for Chinese investment in the oil sector is at an all-time high, up 9% from 2015, to 51% in 2017, according to the findings of the China Institute’s upcoming 2017 Albertans’ Views on China.