INSIGHT: Trump’s Massive Venezuela Oil Gambit is Also Another Massive Wake-Up Call for Canadian Energy

By EnergyNow Editorial Team

If Washington secures access to 90 billion barrels of Venezuelan oil, Canadian producers could face a powerful new competitor in their most important market. Ottawa can no longer afford to delay pipelines, regulatory reform or the investment conditions needed to diversify Canadian energy exports.

The Trump administration is reportedly negotiating what could become one of the largest energy agreements in modern history—and the consequences could reach directly into Alberta’s oilfields.

The early warning signs and consequences of this to Canada were first mentioned in an EnergyNow article this past January by Ron Wallace titled,  DON’T LOOK NOW, BUT…Trump’s Venezuela Geopolitical Earthquake Shakes up Canada’s Plans as a “Net Zero” Energy Superpower

Now, according to Axios, Washington is discussing an ownership stake in more than a dozen producing Venezuelan oilfields containing an estimated 90 billion barrels of proven reserves.  Canada can’t say it was not warned this could happen in advance.

“Calling this deal huge would be an understatement,” one U.S. official told Axios. “It is massive.”

The agreement has not been finalized, and its precise ownership, operating and revenue arrangements remain under negotiation. Nevertheless, its potential scale should command the immediate attention of Prime Minister Mark Carney and every Canadian policymaker responsible for energy and economic development.

This is not simply another foreign oil project. Venezuela holds approximately 300 billion barrels of proven reserves, the largest reported total in the world. Much of that resource is heavy crude capable of competing directly with barrels from Canada’s oil sands.

If American capital, technology and political power are mobilized to restore Venezuelan production, Canada could eventually face much stronger competition inside the U.S. refining market upon which it remains heavily dependent.

Trump is Thinking in Decades

The negotiations reportedly involve U.S. Secretary of State Marco Rubio, Venezuelan acting president Delcy Rodriguez and Deputy White House Chief of Staff Stephen Miller.

In return for an American ownership interest, Venezuela would gain access to private investment and the expertise required to rehabilitate oilfields damaged by years of political interference, underinvestment and deteriorating infrastructure.

“President Trump is close to securing America’s energy future for generations to come, not just in the U.S. but in the hemisphere,” another administration official told Axios.

That statement reveals the strategic scale of Trump’s ambition.

The administration is not merely seeking another source of imported oil. It is attempting to place American interests, companies and technology at the centre of the largest petroleum resource base in the world.

The urgency has been intensified by wars in Iran and Ukraine, disruptions to global supplies and the depletion of the U.S. Strategic Petroleum Reserve. Energy Secretary Chris Wright is reportedly considering travelling to Venezuela as his department examines ways for American companies to increase production.

A deal of this magnitude would take years—and enormous amounts of capital—to deliver its full potential. Venezuela’s power systems, ports, pipelines, upgraders and production facilities all require substantial rehabilitation. Political risk, contract security and the reliability of the Venezuelan government also remain serious questions.

But Canada would be making a profound mistake if it assumed those obstacles will protect its market share indefinitely.

American oilfield service company SLB has already secured access to important Venezuelan oilfield data through an agreement with state-owned PDVSA, according to Reuters. Chevron has also indicated it could increase Venezuelan production with additional approvals and infrastructure investment.

The machinery of redevelopment is beginning to move.

A Direct Challenge to Canadian Heavy Oil

Canada has benefited enormously from the decline of Venezuelan and Mexican heavy-oil exports.

Complex U.S. refineries—particularly those on the Gulf Coast—were designed to process heavy, higher-sulphur crude. As Venezuelan production collapsed, Canadian producers gained greater access to those facilities.

That advantage is now at risk.

Reuters reported earlier this year that Gulf Coast refineries can process approximately three million to four million barrels per day of heavy crude. Valero, PBF Energy and Phillips 66 have already purchased Venezuelan barrels, while Chevron has been working to increase shipments.

Venezuelan production is not about to displace Canadian crude overnight. Canada offers secure production, reliable pipeline delivery, sophisticated companies and a stable legal system. Those are enormous competitive strengths.

But Venezuelan heavy oil does not need to replace Canadian oil to hurt Canadian producers. It only needs to compete for the next available barrel of refinery demand.

Additional Venezuelan supply could pressure Western Canadian Select prices, reduce Canadian producers’ negotiating leverage and widen price differentials—particularly during periods of pipeline congestion or weaker global demand.

The vulnerability comes from Canada’s export concentration. Natural Resources Canada reports that, as recently as 2023, approximately 97 per cent of Canadian crude oil exports went to the United States. Canada’s relationship with American refiners has been commercially beneficial, but depending overwhelmingly on one buyer is not a complete national energy strategy.

Trump’s negotiations with Venezuela demonstrate why.

Canada Cannot Delay its West Coast Pipeline

The Carney government has already acknowledged the need for greater energy independence.

The Canada-Alberta agreement envisions a new pipeline capable of transporting at least one million barrels per day of Alberta bitumen to the West Coast, prioritizing access to Asian markets. It also contemplates adding another 300,000 to 400,000 barrels per day of capacity to the Trans Mountain system.

Those commitments must now move from political announcements to binding schedules, regulatory decisions and construction.

The government announced in July that Canada and Alberta would advance the west coast proposal, arguing it could attract investment, diversify exports and support as many as 140,000 jobs during construction and operation. That is welcome progress but “advancing” a pipeline is not the same as approving and building one.

Every additional year spent debating a route, reopening settled policy questions or waiting for perfect political consensus gives competing suppliers more time to capture investment and market share.

Indigenous consultation, environmental assessment and commercial discipline remain essential. They must be rigorous, credible and conducted in good faith. But they must also have clear timelines and lead to decisions.

Canada needs a defined route, a project proponent, firm Indigenous partnership opportunities, shipping commitments and an expedited federal-provincial approval process. The Carney government should designate the west coast pipeline as a project of national interest and establish a timetable measured in months, not political cycles.

Ottawa Should Endorse the Smith-Ford Pipeline

The federal government should also endorse the east-west pipeline proposed by Alberta Premier Danielle Smith and Ontario Premier Doug Ford.

Their concept would run approximately 3,300 kilometres from Hardisty, Alberta, to the refining centre at Sarnia, Ontario, without crossing the United States. Preliminary proposals suggest capacity of at least 500,000 barrels per day, with the possibility of moving between 500,000 and 800,000 barrels depending on the project’s final configuration.

The strategic argument is compelling.

Ontario currently depends partly on oil transportation infrastructure that crosses through the United States, including the repeatedly challenged Line 5 system. An all-Canadian route would improve domestic energy security, give Alberta producers another market and strengthen the connection between Western Canadian production and Central Canadian refining.

A later extension or connection to Atlantic tidewater could create another export option and revive the strategic objective behind the former Energy East project.

The Smith-Ford proposal is still a concept, not a shovel-ready project. Its economics, route, shipper support and Indigenous partnerships must all be established. But federal endorsement would send a powerful signal that Canada is finally serious about building national infrastructure.

Ottawa should invite Alberta, Ontario, Saskatchewan, Manitoba, Quebec, Indigenous governments, pipeline companies, refiners and institutional investors to develop a commercial framework. The federal government does not need to write a blank cheque, but it does need to become a determined facilitator rather than a passive observer.

Investment Follows Certainty

Pipelines alone will not solve Canada’s competitiveness challenge.

The Carney government must create conditions that encourage companies to invest in production, emissions-reduction technology, upgrading, refining, LNG and supporting infrastructure.

That requires predictable industrial carbon policy, faster impact assessments, competitive taxes and incentives, dependable project timelines and coordination between federal and provincial regulators. Investors need to know that a project meeting Canada’s rules can actually receive a decision and, if approved, be built.

Capital is mobile. Washington understands that.

The United States is willing to combine diplomacy, national security policy and private-sector expertise to secure access to a massive but politically risky foreign resource. Canada, by comparison, already possesses approximately 163 billion barrels of proven reserves, a stable democracy, skilled workers, world-class producers and some of the highest operating standards anywhere.

Canada’s problem is not a shortage of energy. It is the inability to make timely decisions about developing and transporting it.

The Warning Could Not be Clearer

A U.S.-Venezuela agreement is not yet complete, and rebuilding Venezuelan production will be neither fast nor inexpensive. Canada should not panic, nor should it underestimate the durability of its relationship with American refiners.

But complacency would be equally dangerous.

Trump is attempting to secure an enormous new source of heavy oil while strengthening American influence over energy supply throughout the Western Hemisphere. If successful, the deal could reshape investment flows and intensify competition for the very refineries that purchase Canadian crude.

Canada still has time to respond, but no longer has time to waste.

The Carney government should accelerate approval of the new west coast pipeline, formally support development of the Smith-Ford east-west corridor and implement energy policies that give investors confidence to deploy capital in Canada.

Venezuela’s oil revival may take years. Unfortunately, based on Canada’s recent record, so does approving almost anything.

That is precisely why Ottawa must begin acting now.

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