Canada may look to China for oil exports after pipeline rejection

With president Barack Obama rejecting a permit for TransCanada Corp's Keystone XL oil pipeline, Canada  may be forced to look to China for oil exports.

Canadian Prime Minister Stephen Harper, yesterday told Obama in a telephone call that Canada would continue to work to diversify its energy exports. According to Canadian natural resource minister Joe Oliver, less reliance on the US would help strengthen the country's ''financial security.''

Oliver told reporters in Ottawa, that the decision by the Obama administration underlined the importance of diversifying and expanding Canadian markets, including the growing Asian market.

Currently, 99 per cent of Canada's oil is supplied to the US a figure that Harper wants to reduce to make Canada a ''superpower'' in global energy markets.

According to BP Statistical Review of World Energy, Canada accounted for over 90 per cent of all proven reserves outside the Organisation of Petroleum Exporting Countries, with the bulk of Canada's crude produced from oil-sands deposits in the landlocked province of Alberta. The output from the oil sands is expected to double over the next eight years, according to the Canadian Association of Petroleum Producers.

Harper expressed profound disappointment with the news and went on to say that he was told by the president that the rejection was not based on the project's merit and that the company was free to re-apply.