Canada’s Oil Can’t Solve Russian Supply Squeeze, Environment Minister Says

Canada can’t ramp up oil shipments quickly enough to bring down crude prices that have soared since Russia’s invasion of Ukraine, the country’s environment minister said.

“Let’s be reasonable, we can’t help Europe with oil,” Steven Guilbeault said in an interview with Bloomberg News. “Our export capacity is pretty much maxed out. We’re building a pipeline. It’s just going in the wrong direction and the idea that we somehow could start to build a bunch of new infrastructure in Canada and it would magically happen — either for gas or for oil — is not very serious.”

European countries, heavily dependent on Russian oil and gas for decades, are looking for alternatives after the invasion prompted the European Union, the U.S. and other countries to impose widespread economic sanctions on Russia. The supply squeeze has caused prices to surge: West Texas Intermediate rose as high as $116 on Thursday and Brent crude topped $119, the highest since 2012, before falling back.

So far, the sanctions have allowed Russian oil and gas to continue to flow, but many purchasers are avoiding Russian crude over fears of potentially being offside on other sanctions.

Canada, home of the Alberta oil sands, is the world’s fourth-largest oil producer behind the U.S., Saudi Arabia and Russia, but nearly all its crude exports go to its southern neighbor. Some Canadian crude is exported abroad off the U.S. Gulf Coast, but the country has just one oil pipeline that connects to tidewater, the Trans Mountain pipeline to the Vancouver area.

A expanded Trans Mountain line is under construction. Plans to build other pipelines to Canadian ports, including the so-called Energy East pipeline to Eastern Canada, were canceled after environmental opposition.

The country is also the sixth-largest natural gas producer, but doesn’t operate any liquefied natural gas export plants that would allow the country to ship the fuel to European customers. Currently, one LNG plant is being built on the Pacific Coast; it won’t be completed before the middle of the decade.