Natural Resources Committee on May 1st, 2014

[The Chair, Conservative, Leon Benoit]

Mr. Dem'ianiuk.

[Vitalii Dem'ianiuk]

I think Canada can play a huge role in the moderation of the process of diversification of the energy supply into Ukraine and into Europe. You can also play a huge role in the question of technology transfer, as I said. The next step, after you have the appropriate infrastructure ready, I think Canada will play a significant role as a supplier of hydrocarbons on the European market.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Thank you.

We'll move now to the next witness who wants to take that, particularly looking at what the other players are going to do that will influence what Canada will do.

[The Chair, Conservative, Leon Benoit]

Mr. Hill, you're indicating that you would like to answer. Go ahead, please, sir.

[Dr. Geoff Hill]

I think some of the other countries are better positioned to act more nimbly to export to Europe. They already have facilities and infrastructure, but remember that every time gas is diverted to Europe, it's leaving a gap for who they're currently supplying. If you overlap that with the fact that our global demand for gas and oil still shows no sign of slowing over the short term, I don't think that Canada is at any risk for overinvesting in exporting its products. The long-term focus globally still is very strong.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Mr. Aslund, could you comment in particular on what positioning you see from the U.S. to the EU and other major players that will be involved in this? Will they be taking an active role in trying to shape the situation? If so, what do you anticipate they will be concentrating on?

[Anders Aslund]

Well, as you know, here the Republicans are very strongly in favour of exports of LNG, and I presume that this will become government policy. I see Canada and the U.S. as acting in parallel.

Currently, the import share of the EU is only 10% LNG. I do not see any reason for it not to rise quite sharply, because gas prices in eastern Europe are still far too high and LNG can sharply reduce them, with a profit, also, for Canadian and U.S. LNG producers.

We have seen a stagnation in the last two years of LNG imports to Europe, simply because the prices in east Asia have been so much higher. My guess is that we will see rather soon a saturation, since so much extra LNG is coming online. Then we will see more LNG going profitably to Europe. This will be very good for energy security and diversification in Europe.

The main role of the European Union here is simply to make sure there are more possibilities for choice. Shale gas is still totally up in the air. The two big players in Ukraine, as I mentioned, are Chevron and Shell. Exxon seems to have lost its position in Ukraine with the Russian annexation of Crimea.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Does Mr. Edwards want to say something?

[Michael Edwards]

Yes. I would say first of all that we have to be careful here between the political question of dealing with the political situation and dealing with promising help from an industry on a commercial basis. I think there is a risk that we can over-promise if we start converting political statements of solidarity into a commitment that we're actually going to deliver gas.

In terms of what others are doing, I think there is a debate in the U.S. that is still ongoing. We've seen some initial approval of gas exports, but there is that debate between balancing the needs of the owners of the resource—the gas—and the interest of how to best serve the American economy. I'm not sure that it's entirely resolved. At the end of the day, I don't think we're actually going to see a wide opening of U.S. gas exports. I think there is risk in that.

Also, between shale gas and energy efficiency, for instance, Europe has a lot of this to deal with in its own hands. They can probably reduce nearly 50% of what Russia sends into Europe through either alternate means or the other suggestions that I made earlier—

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Mr. Edwards, you're saying that's possible.

[Michael Edwards]

Yes, I am.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Again, reading too much into what politicians do is always a risky thing, but either from a market-driven solution or a politically pushed solution in Europe, do you anticipate they will be pushing to assist Ukraine and eastern Europe with energy efficiency and certain other technology transfers? They may not have the ability to help Ukraine or develop shale gas, but I suspect on energy efficiency that the European Union has as much or more expertise than we do here in North America. Is that something their politicians look set to be pushing? Is that something their market players look set to be willing to deliver assistance for in that regard?

[Michael Edwards]

The short answer is yes. There is clearly an opportunity there because there is a need, but I think from my conversations from Europe this week there is also a caution that they will only go where they're wanted. There needs to be not only an opportunity but the business structure around it to make it happen, and a willingness on the part of that state to change the way things are being done at the moment.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Trost and Ms. Crockatt.

I just want to thank all of the witnesses today. You've given us some very useful and interesting information, and we do thank you very much for that.

I'd like to thank Mr. Edwards, principal, Fairweather Hill, who is with us in the committee room today.

By video conference from Geneva, Switzerland, we have Mr. Dem'ianiuk from the Geneva Graduate Institute of International Studies and Development. Thank you, sir, very much.

We have, from Calgary, Alberta, from Deloitte Canada, Geoff Hill.

We have by teleconference from Washington, D.C., Anders Aslund, senior fellow at Peterson Institute for International Economics.

I just want to thank you all very much.

Before I adjourn the meeting, I had some discussion with members of the committee, and the clerk said it would it be easier if we passed the budget for this study. Is it agreed by the committee that we pass the budget as presented?

[Some hon. members]

Agreed.

[The Chair, Conservative, Leon Benoit]

Thank you very much for that cooperation. Thank you all.

The meeting is adjourned.