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Canada swipes at Venezuela in push for U.S. approval of Keystone

Canada's Natural Resources Minister Joe Oliver speaks during Question Period in the House of Commons on Parliament Hill in Ottawa March 26,
Canada's Natural Resources Minister Joe Oliver speaks during Question Period in the House of Commons on Parliament Hill in Ottawa March 26,

By Jeffrey Jones

CALGARY, Alberta (Reuters) - Canada is playing up its record as a reliable oil supplier to the United States compared to politically volatile Venezuela, as it seeks to win favor in Washington for the contentious Keystone XL pipeline to Texas refineries.

Natural Resources Minister Joe Oliver said on Thursday that the United States, already Canada's largest oil market by far, can expect far better service than it has received from the South American OPEC member that currently feeds a large chunk of oil demand in the Gulf Coast region.

"Venezuela may be a major supplier of heavy crude to the U.S., but it has also threatened to cut supplies five times in as many years," Oliver said in a speech to business people and academics in Calgary.

"That's not a reliable partner. That's not a stable source of oil. And that's not how Canada will ever treat the United States."

Despite frequent threats, Venezuela has not shut off exports to the United States, but Oliver's remarks underline how high the stakes have become for Canada as a U.S. decision on Keystone XL looms.

Prime Minister Stephen Harper's Conservative government and Alberta Premier Alison Redford have aggressively lobbied U.S. politicians ahead of the Obama administration's decision, likely this summer, whether to approve the $5.3 billion TransCanada Corp proposal.

Oliver is scheduled to travel to Washington and New York next week to meet with Republican and Democratic lawmakers as well as the media.

Canada and its oil industry say the project will bring energy security, jobs and growth to both countries as oil sands-derived crude flows to the largest refining market in the United States.

The project faces strong opposition from environmentalists, who say it would vastly increase greenhouse gas emissions and risks of oil spills.

According to U.S. Energy Information Administration data, the United States imported 2.5 million barrels of oil a day from Canada last week, versus 709,000 from Venezuela. However, the lion's share of the Venezuelan crude was used by Gulf Coast refineries, and only a fraction of the Canadian crude flowed to that region due to limited infrastructure to get it there.

Tight export pipeline capacity in the United States has helped create a glut in Canada, and is cited as a key reason that Canadian heavy oil is deeply discounted in the fight for space to transport it.

Oliver said he was not specifically seeking to cast aspersions on the competing oil supplier.

"I'm not taking a shot. The reason I mention Venezuela is that Venezuelan oil is a large part of the oil that comes into the United States," he told reporters following his speech. "If our oil comes down, it will be displacing Venezuela oil. I'm just simply commenting on that economic reality."

He said he mentioned the threats of supply disruption as "historical fact."

Canada was also less than laudatory this week following the disputed election of Venezuelan President Nicolas Maduro. Ottawa congratulated Venezuelans for voting in large numbers but failed to mention that Maduro, a protégé of late President Hugo Chavez, was declared the winner.

(Reporting by Jeffrey Jones; Editing by Gary Hill)

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