* Mexico's energy reforms a 'bold move' into US, global
* More competition furthers Canada's push to reach more
By Kristen Hays
HOUSTON, March 4 Mexico's energy reform
initiative will spark competition with Canada in terms of
supplying the United States with oil and natural gas, further
fueling the major oil producer's efforts to diversify export
markets, Canada's minister of natural resources said on Tuesday.
"There's no question that Mexico has embarked on a bold
move," Joe Oliver, Canada's natural resources minister, told
reporters at the annual IHS CERAweek energy conference in
"They will emerge as another player. We're focusing on
diversifying our market, so that's perhaps yet another reason to
do that. Well, in fact it is," he said.
Last December Mexican president Enrique Peña Nieto signed
into law a sweeping energy reform that ends the 75-year monopoly
state-owned oil company Pemex held on oil and gas production.
Nieto is making the case that Mexico is open for business,
underscored by energy reform, the hallmark of his 14-month-old
Oil output has been rising in the United States and Canada,
but in Mexico production has fallen 25 percent since 2004
despite increased investment.
The reforms, which will open Mexico's energy industry to
foreign companies, could solicit investment that leads to more
oil and gas flowing to the United States, potentially displacing
some Canadian imports.
In an interview with Reuters, Oliver called Mexico a good
friend and trading partner to Canada.
"Friends sometimes compete commercially. We do with the
United States," he said.
He said if the reforms go forward as the Mexican
administration expects, Mexico will emerge as a bigger factor in
the global energy market.
"But we are looking to diversify," he said. "There's huge
ONE CUSTOMER, SEEKING MORE
Currently, the United States is Canada's sole customer for
oil and natural gas. Oliver said the U.S. is quickly moving
toward self-sufficiency "and will soon be a competitor."
Five U.S. liquefied natural gas projects have full approval
to export from the United States, including to countries with
which the U.S. does not have a free trade agreement. About 20
other projects await U.S. Energy Department approval.
On the oil side, Canadian crude shipments via rail to the
U.S. are increasing, but the controversial northern leg of
TransCanada's Keystone XL pipeline awaits approval from
the U.S. State Department after multiple reviews and
Enbridge Inc's Alberta Clipper pipeline also awaits
U.S. regulatory approval of expansion plans and is gaining
environmental opposition similar to that of Keystone.
But Canada has three potential new pipelines to move oil to
its west and east coasts for export to other countries, Oliver
Those include Enbridge's $7.1 billion, 550,000 barrels per
day Northern Gateway pipeline from Alberta to the Pacific Coast.
Another one is Kinder Morgan Energy Partners' $5.1
billion proposal to nearly triple its Trans Mountain crude oil
pipeline to 890,000 bpd to ship more oil from Alberta to the
The third is TransCanada's proposed $10.8 billion 1.1
million bpd Energy East pipeline. TransCanada said Tuesday it
had filed a preliminary description of the project, which would
carry oil from Alberta to Quebec and New Brunswick, with
Steve Wuori, strategic advisor and former head of major
projects at Enbridge, said at the conference that the company
started working on the Gateway project a dozen years ago with a
desire to gain access to the Asian market.
If the U.S. is the only market for Canadian crude, "then
price is the victim," he said, as Canadian crude trades at a
discount to U.S. crude, which is cheaper than other global
crudes in light of the U.S. oil production boom.
Oliver declined to discuss the specific projects,
particularly the Northern Gateway, which is awaiting his final
decision on approval.
But in general, such projects would help move Canadian crude
to global markets, he said.
"It's a strategic objective to diversify, which means we've
got to get the resources to tidewater, which means we've got to
build pipelines," Oliver said.