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For the first time, Alberta and the Organization of Petroleum Exporting Countries have established an official relationship. It`s a new strategy with big implications, including potential investment by OPEC members in Canada`s oil sands.
The link was formalized by Ed Stelmach, Alberta`s Premier, during a visit to OPEC`s Vienna headquarters earlier this month and gives the province a seat at OPEC`s `dialogues` on matters of mutual interest. Other jurisdictions, such as the United States and the EU, take part in the events.
"I`ve always found it`s a good thing to know your competitors," Mr. Stelmach said after meeting with OPEC`s Secretary-General, Libya`s Abdalla Salem El-Badri, about two weeks ago. "There are connections that can only be made in person, one-on-one."
While Alberta has had meetings with OPEC representatives in the past, such as between former Alberta premier Peter Lougheed and Saudi Arabia`s Sheik Yamani, the new link is the first political connection between Alberta and OPEC, said Paul Stanway, the Premier`s spokesman.
"We are not able to be an official observer, but we are able to take part in this dialogue process they have with other major oil and gas producers," he said, noting the observer status is bestowed only on nations such as Norway or Russia.
It`s a front where Alberta should proceed with caution. Alberta is a province and doesn`t run its own oil company, making it hard to deliver without the support of private industry, with whom it has a testy relationship at this point, and the federal government.
It is also getting friendly with people that are nationalizing their oil industry, often at the expense of private-sector foreign oil firms, including Alberta-based ones. Further, this OPEC connection could stir hostility from oil consumers in the rest of Canada, particularly at times of high oil prices.
Still, there is upside for both sides.
Alberta and Energy Minister, Mel Knight, who will manage the relationship with senior officials from Alberta`s energy department, gets to relate to other big global oil producers, with whom it has common interests, including price, supply and government revenue stability.
For its part, OPEC, which under Saudi Arabia`s leadership has been striving for greater international acceptance, gets to count among its friends a Western democracy that has been a leader in reserves transparency, has favoured ties to the United States and a track record of technological innovation.
The relationship is also seen as opening doors to investment.
After dismissing Canada`s oil sands as marginal for most of this decade, OPEC has changed its view in the past couple of years.
"We have seen a softening of that stance, particularly from the Saudis," said Fred Cedoz, vice-president of the Washington-based consulting firm, GWEST, which helped organize the Alberta Economic Forum in Geneva that preceded Mr. Stelmach`s OPEC meeting.
"OPEC producers understand that everybody is going to play in this game to meet the projected global demand in the future. While it`s true that the oil sands may be the marginal barrel, the volume of crude that could be brought to market is too great to ignore," Mr. Cedoz said.
Some OPEC members, such as Gulf producers, that have big funds to invest like the stability and long-term nature of the oil sands and the fact that it`s in a business they know well. They also like the fact that oil sands` investments have become more affordable due to the oil price downturn that has depressed share prices and costs of development.
"[They] know that they don`t have the world`s only oil, and for them to stay engaged as other regional producers ramp up, to be as relevant as they are in the discussion about energy supplies today, it would help if they were also invested in the production of those supplies," Mr. Cedoz said. "It gives them a broader platform for the policy and economic discussion that follows from energy development."
Read the full article here.
The link was formalized by Ed Stelmach, Alberta`s Premier, during a visit to OPEC`s Vienna headquarters earlier this month and gives the province a seat at OPEC`s `dialogues` on matters of mutual interest. Other jurisdictions, such as the United States and the EU, take part in the events.
"I`ve always found it`s a good thing to know your competitors," Mr. Stelmach said after meeting with OPEC`s Secretary-General, Libya`s Abdalla Salem El-Badri, about two weeks ago. "There are connections that can only be made in person, one-on-one."
While Alberta has had meetings with OPEC representatives in the past, such as between former Alberta premier Peter Lougheed and Saudi Arabia`s Sheik Yamani, the new link is the first political connection between Alberta and OPEC, said Paul Stanway, the Premier`s spokesman.
"We are not able to be an official observer, but we are able to take part in this dialogue process they have with other major oil and gas producers," he said, noting the observer status is bestowed only on nations such as Norway or Russia.
It`s a front where Alberta should proceed with caution. Alberta is a province and doesn`t run its own oil company, making it hard to deliver without the support of private industry, with whom it has a testy relationship at this point, and the federal government.
It is also getting friendly with people that are nationalizing their oil industry, often at the expense of private-sector foreign oil firms, including Alberta-based ones. Further, this OPEC connection could stir hostility from oil consumers in the rest of Canada, particularly at times of high oil prices.
Still, there is upside for both sides.
Alberta and Energy Minister, Mel Knight, who will manage the relationship with senior officials from Alberta`s energy department, gets to relate to other big global oil producers, with whom it has common interests, including price, supply and government revenue stability.
For its part, OPEC, which under Saudi Arabia`s leadership has been striving for greater international acceptance, gets to count among its friends a Western democracy that has been a leader in reserves transparency, has favoured ties to the United States and a track record of technological innovation.
The relationship is also seen as opening doors to investment.
After dismissing Canada`s oil sands as marginal for most of this decade, OPEC has changed its view in the past couple of years.
"We have seen a softening of that stance, particularly from the Saudis," said Fred Cedoz, vice-president of the Washington-based consulting firm, GWEST, which helped organize the Alberta Economic Forum in Geneva that preceded Mr. Stelmach`s OPEC meeting.
"OPEC producers understand that everybody is going to play in this game to meet the projected global demand in the future. While it`s true that the oil sands may be the marginal barrel, the volume of crude that could be brought to market is too great to ignore," Mr. Cedoz said.
Some OPEC members, such as Gulf producers, that have big funds to invest like the stability and long-term nature of the oil sands and the fact that it`s in a business they know well. They also like the fact that oil sands` investments have become more affordable due to the oil price downturn that has depressed share prices and costs of development.
"[They] know that they don`t have the world`s only oil, and for them to stay engaged as other regional producers ramp up, to be as relevant as they are in the discussion about energy supplies today, it would help if they were also invested in the production of those supplies," Mr. Cedoz said. "It gives them a broader platform for the policy and economic discussion that follows from energy development."
Read the full article here.