Northern Gateway Pipeline: In whose interests?

April 2010: China's Sinopec purchased a 9% interest in Syncrude's tar sands operatioin

China’s on an oil buying binge.  And Canada is where China likes to shop.

Since 2002 China, through four state owned oil companies, has spent over $65 billion dollars to purchase oil and gas fields and production facilities around the world.

Almost 15% of China’s expenditures went towards securing oil from Canada’s tar sands, according to a joint 2011 report of the International Energy Agency and the OECD.  China now owns significant stakes in Northern Lights Oil Sands, MEG Energy, Athabasca Oil Sands, Penn West Energy and Syncrude.

China’s buying spree isn’t an accident.  It’s a government policy that’s developed haphazardly since the late 1980’s.  China is determined to ensure that it continue to grow an economy that is increasingly dependent on energy from oil and gas.

In 2009, China imported 53% of its oil.  By 2035 that’s expected to grow to 82% or 12.8 million barrels each and every day.  China’s foreign policy is, in part, determined by the need to resource that growth.

That means moral issues like human rights take back seat to oil security.  “No matter if it’s rogue’s oil or a friend’s oil, we don’t care,” an energy adviser told the Washington Post in 2005 on the condition he not be identified, citing the threat of government disciplinary action. “Human rights? We don’t care. We care about oil.”

Ditto for the environment.  China’s interest in oil security overrides all other concerns.

As China’s resource needs grow, so do its concerns over the security of its oil supplies.  The government policy to buy up foreign producers blossomed in the 1990’s (the Go Outside policy) but the mad rush really took off after the Iraq war secured Iraq’s vast resources for US interests.

Before the war, China was playing footsie with Saddam Hussein and even signed a deal that would give it rights to a significant new play in northern Iraq.  The deal died with Saddam.

After Iraq, China redoubled its efforts to secure future oil resources.  As Shen Dingli, an expert at Fudan University who advises the Chinese government on energy security, put it in the Washington Post article “If the world oil stocks were exceeded by growth, who would provide energy to China?  America would protect its own energy supply. The U.S. is China’s major competitor.

But owning foreign oil fields can’t provide all the oil security China requires.  There’s still the matter of getting the oil it owns to China.  It doesn’t matter much if you own the oil but can’t ship it home.

That’s where Enbridge’s pipeline comes in.

China may be increasing its control over Canada’s tar sands, but it still may not be able to secure access to the oil they produce if it can’t control the supply route.

It’s no accident that China’s four major government owned oil companies are investing in the development of Enbridge’s Northern Gateway Pipeline.  It’s an old story:  first buy the oil then buy the pipeline.  Its happened in Russia, in Myanmar, in Kurdistan.

So it’s no surprise that the Chinese investment in Northern Gateway comes with a price related to China’s oil security.

In return for China’s investment Enbridge will provide the Chinese companies with a secure spot on the pipeline for their oil as well as options to purchase an ownership share in the pipeline if and when it’s built.

Enbridge’s PR machine – including the PM’s office and Tory spin shops like ‘EthicalOil’ – are attacking Northern Gateway critics for catering to foreign – read American – green energy interests.

But the real issue here is why is Canada catering to China’s foreign policy interests?

That’s a debate that both Enbridge and the PM’s office would rather not have.  It goes something like this:  Is it in Canada’s interests to ship unrefined bitumen to China to secure China’s energy needs and manufacturing based economy?  Is there a better use – with our proximity to the US market – for Canada’s energy advantage than supplying China with the raw material for its own growth?

That debate should fundamentally be about Canada’s future, our economy and our citizens, not China’s.  Then, and only then should we turn our attention to the Gateway project.


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13 Responses to Northern Gateway Pipeline: In whose interests?

  1. Dan Schubart says:

    Great piece. Thank you.

  2. Norm Farrell says:

    We often forget about the higher uses of oil, beyond burning it in our vehicles. If the Harper Government had Canada’s long term interests in mind, they would use oil resources as the cornerstone of industrial expansion here.

    Whether you are a no-development greenie, an avaricious capitalist or simply a person that hopes your descendents will have jobs to find, you should not support bitumen export.

  3. spartikus says:

    What we are seeing is pure Karl Rovism: Attack your opponent where you are weakest.

    George W. Bush avoided service Vietnam? Attack John Kerry’s war record.

    The Northern Gateway consortium filled with foreign multinationals? Attack the [tenuous] foreign links of the local environmental movement.

    Frame the narrative so that the pipeline being in Canada’s interest is already assumed.

    Attack. Distract. Change the subject.

  4. Kim says:

    Ian, you are right. Why is that not the headline or the poll?

    Sharing this widely! Peace…

  5. Ray Blessin says:

    Build the goddam refinery in Fort Mac! Make the gasoline, diesel, Jet fuel etc. and use it here in Canada. Existing pipelines, highways and rail lines are already in place for distribution. Jobs?! Thousands of jobs! Real jobs. All kinds of jobs!

  6. spartikus says:

    Hmm…I left a comment earlier. Am I banned from commenting on this site?

  7. Ian says:

    Not a bit. But I don’t see the comment Spartikus. I apologize and would appreciate if you’d repost.

  8. Ian says:

    This comment was buried in my spam field, which I haven’t cleaned up for a while. Sorry about that Spartikus

  9. spartikus says:

    Now I feel silly 🙂

    It was something along the lines of this is classic Rovism: Attack your enemy where you are weakest.

    George W. Bush avoided service in Vietnam? Attack John Kerry’s war record.

    The Northern Gateway consortium filled with foreign corporations? Attack your opponents [tenuous] ties to groups outside the country.

    Distract. Deflect. And always, always be on the offensive.

    It’s a bit tired and familiar at this point.

  10. karen says:

    Hmm. China owns quite a bit of Alberta’s oilfields. China doesn’t care about human rights or the environment. I heard a little bit of sabre-rattling in the news they other day – 2 things, China was warning the west not to interfere in China’s growth, and Harper told the US that if they did not okay the Keystone XL pipeline Canada would make China Canada’s preferred oil customer. So what I wonder is- can we stop this?

  11. Let’s not forget that the HarperCons old buddy, former Cabinet Minister David Emerson, now works for the government of China. He’s in the China Investment Corp. which guides the state in its purchases…

  12. visitar says:

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  13. It is a pleasure to read such extensive information.

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