China promised pandas. Canada vowed — almost — to provide energy export pipelines.
And those were the highlights of Prime Minister Stephen Harper’s five-day visit to China, which he ended with hints that a bi-lateral free trade pact is possible in time.
Along with that, Harper offered an assurance that “our government is committed to ensuring Canada has the infrastructure necessary to move our energy resources to diversified markets.”
For now, a once-chilly Sino-Canadian mood seems to have melted and nothing is more symbolic of the growing friendship than China’s offer to loan two of its prized pandas to Canadian zoos for 10 years.
Harper started on a high note by concluding 18 years of talks with Beijing to reach a foreign investment promotion and protection agreement, or FIPA, pointing to the deal up as proof of the strategic importance China attaches to two-way investment.
Under FIPA — which must still clear legal and bureaucratic hurdles before it can become law — foreign investors are assured they will be treated the same as domestic companies, while disputes will be resolved by an international-type tribunal.
“Together Canada and China enjoy a strategic partnership based on respect and admiration,” Harper told the Chinese leaders, while Chinese Premier Wen Jiabao said “strengthening communication and cooperation is our shared aspiration and also serves the fundamental interests of our two countries.”
Record investment
Canadian direct investment in China reached a record C$4.8 billion in 2010, up 38 percent from 2009, while Chinese investment in Canada climbed 10 percent to C$14.1 billion in 2010, dominated by Alberta’s oil sands and British Columbia’s shale gas deposits.
To reinforce the priorities, Harper invited several dozen business leaders to join him on the trip, including executives from the petroleum, aerospace, forestry, agriculture and uranium sectors.
Although LNG exports from Canada to Asia have made the fastest progress on the energy front, Enbridge’s Northern Gateway pipeline to ship oil sands crude across the Pacific got the most attention, given Harper’s insistence that it underpins his government’s resolve to expand Canada’s oil exports beyond the United States.
While Northern Gateway faces lengthy and uncertain regulatory reviews, Harper gave the project an indirect boost when he said it has “become increasingly clear that it is in Canada’s national interest to diversify our energy markets.”
“To this end, our government is committed to ensuring that Canada has the infrastructure necessary to move our energy resources to those diversified markets,” he said.
Abundant resources
Harper told a Chinese business dinner that Canada has “abundant supplies of virtually every form of energy. And you know we want to sell our energy to people who want to buy it … it’s that simple.”
Northern Gateway is rapidly becoming the test case for that goal.
Enbridge Chief Executive Officer Pat Daniel, who was part of Harper’s delegation, said Chinese oil executives are growing frustrated by the uncertain outlook for Northern Gateway.
“They’re frustrated, as we are, with the length of time it takes (to obtain approvals),” he said. “Canada seems like a perfect match that should last a long time, but if you don’t move it along, people lose interest. We don’t have forever.”
Daniel said it is still hopeful to clear the regulatory process within two years so that crude can start flowing by late 2016 or early 2017.
He said both China National Petroleum Corp. and China National Offshore Oil Corp. are “very interested” in the benefits of Northern Gateway.
Last, best offer
Daniel also said Enbridge has effectively made its last, best offer of stakes in Northern Gateway to First Nations, including 10 percent equity and C$1 billion in community development money to remote and often impoverished communities.
However, he said Enbridge is prepared to take a second look at moving Northern Gateway’s proposed terminal from Kitimat, where tankers face difficult navigation in the Douglas Channel, to Prince Rupert, which is 16 hours closer to open water.
Meanwhile, Alberta Energy Minister Ted Morton said his government is ready to share some of its “rewards” from Northern Gateway to win over a hesitant British Columbia government.
He said the issue of “equalizing risk-benefit ratios between B.C. and Alberta has to be addressed,” adding the two premiers — Alberta’s Alison Redford and B.C’s Christy Clark — have already held “construction discussions.”
But Morton would not say whether Alberta is prepared to share royalties from exported crude, although he did concede that the oil industry may have to take “more pro-active” measures to protect the B.C. salmon fishery from tanker or pipeline accidents.
