US-Venezuela Oil Deal Puts Alberta's Energy Interests at Risk

The United States has signed a massive oil deal with Venezuela, securing rights to 64 billion barrels of Venezuelan oil through North American Blue Energy Partners (NABEP). The arrangement grants 100-year concessions on 17 oil fields and includes a 35-per-cent Pentagon stake.

Alberta Premier Danielle Smith is right to reject using oil as a trade-war weapon against the US, warning that a 50-per-cent export tariff could invite severe retaliation from Washington. She also argued that the deal reinforces why the West Coast oil pipeline is necessary for Asian diversification.

The substitution Washington imagines, Venezuelan crude replacing Canadian oil in American refineries, may be a mirage. Venezuela's heavy oil production has collapsed, and reversing this will require tens of billions and decades. Alberta's oilsands have been in development since the 1960s and still produce about 3.3 million barrels per day.

What should concern Albertans is not the immediate flow of Venezuelan barrels but the doctrine behind the deal. Of the newly granted contracts, five were previously operated by Chinese companies, which had their contractual rights overridden by a US-backed interim government in Caracas. The displaced fields were vastly underproducing, and China remains Venezuela's largest oil customer.