-- Neal Kimberley is an FX market analyst for Reuters. The
opinions expressed are his own --
By Neal Kimberley
LONDON, September 2 (Reuters)- Over time, the Canadian
dollar might prove to be a winner from the conflict in Ukraine,
which has highlighted the European Union's reliance on energy
supplies from Russia.
For a graphic of European dependence on gas from Russia: link.reuters.com/nah72w
Canada is a potential provider of oil and gas to Europe from
its western provinces, and considerable investment has been made
in infrastructure to get production to North America's eastern
seaboard for possible transatlantic passage. If that business
develops, it can only bolster demand for the Canadian dollar.
The investment in pipeline and transport is clear.
Enbridge, Canada's biggest pipeline company,
expects its new 450,000-barrel-per-day Seaway Twin pipeline to
carry Canadian oil-sands crude to the U.S. Gulf Coast in
TransCanada Corp plans to transfer 3,000 kilometres
(1,864 miles) of under-utilised natural gas mainline system to
the 1.1 million barrel-per-day Energy East pipeline. That will
ship crude from Alberta's oil sands to Saint John in New
Brunswick, on Canada's Atlantic seaboard.
Saint John is also the home of Canada's largest oil-by-rail
terminal, one of many now established on North
America's eastern and Gulf shoreline.
The fact that, in April, Enbridge's U.S. subsidiary Tidal
Energy Marketing secured a U.S. government license to export
"limited quantities" of Canadian-origin oil from a U.S. port is
encouraging. The licenses were specifically to
re-export oil to Europe, the first awarded the U.S. Commerce
Department had awarded since 2008.
Of course, none of this can happen overnight. But it does
suggest Canada would be part of the solution if the EU decides
it needs to reduce its energy dependency on Russia.
Canada and the EU have been edging toward closer trade
relations, and energy is a key component.
"We don't see the crisis in Ukraine as simply an opportunity
to market Canadian products," Canadian Prime Minister Stephen
Harper said in June. "But obviously we're deeply engaged in a
discussion with our allies on how we can make sure that globally
our energy supplies are secure and stable."
In the same month, European Union policymakers were
reportedly proposing to scrap a requirement to label oil from
tar sands, of which Canada is the top producer, as more
polluting than other types of crude.
The European Union and Canada are set to sign a
Comprehensive Economic and Trade Agreement in Ottawa on Sept
25-26. The agreement would need to be ratified by both the EU
and Canadian parliaments.
While EU lawmakers have threatened to block the pact, some
over environmental concerns, a growing awareness of the
implications of Europe's dependency on Russian energy supplies
could well focus legislators' minds.
Canada is also aligned with Europe militarily, as a NATO
member, and is said to have shown interest in participating in a
new rapid reaction force to boost the alliance's defences in
response to Russian intervention in Ukraine.
In the current circumstances, closer energy ties between the
European Union and Canada make sense. The Canadian dollar can
only be a beneficiary of such a process.
(Editing by Nigel Stephenson, Larry King; Reuters Messaging: