Canada Targets Asia Energy Sales After U.S. Pipeline Delay, Harper Says

Canada will seek to join a new Asian trade block as it tries to increase energy exports to the region following the U.S. decision to delay approval of TransCanada Corp.’s $7 billion Keystone XL pipeline, Prime Minister Stephen Harper said.

“This does underscore the necessity of Canada making sure that we’re able to access Asian markets for our energy products, and that will be an important priority of this government going forward,” Harper said late yesterday, according to a transcript of remarks to reporters at the Asia Pacific Economic Cooperation forum in Honolulu.

Harper told President Barack Obama in Hawaii that Canada is interested in joining the Trans-Pacific Partnership trade talks to boost trade with Asian nations, according to a statement from the White House. The Trans-Pacific is a trade agreement being negotiated by the U.S. and eight other countries, including Malaysia and Vietnam.

The U.S. State Department said Nov. 10 it would delay a decision on Keystone XL to study an alternative route that would avoid environmentally sensitive areas in Nebraska. The 1,661- mile (2,673-kilometer) pipeline would deliver 700,000 barrels a day of crude from Alberta’s oil sands to the Gulf of Mexico by crossing Montana, South Dakota, Nebraska, Kansas, Oklahoma and Texas.

Harper said that while he is “disappointed,” he remains optimistic that the project will proceed “because it makes eminent sense.”

Meeting Obama

“There has been extremely negative reaction to this decision in the United States, because this pipeline and this project is obviously what’s in the best interests, not just of the Canadian economy, but also the American economy,” the prime minister said.

Harper made the comments before a meeting in Honolulu with President Obama. The two discussed the pipeline at the meeting, according to an e-mailed statement by the White House.

“The president underscored his support for the State Department’s announcement regarding the need to seek additional information about the Keystone XL pipeline proposal to ensure that all questions are properly addressed and all the potential impacts are properly understood,” according to the statement.

Canadian Finance Minister Jim Flaherty said in an interview Nov. 10 in Honolulu that the Keystone XL project may not “survive” the delay. Calgary-based TransCanada Corp. (TRP) has said it is studying alternative routes in an attempt to salvage the pipeline.

‘Buy American’

The Keystone delay is the latest of several U.S. moves that have irked Canada, its partner in the largest two-way trade partnership in the world. Canada has objected to “Buy American” provisions in the Obama administration’s $447 billion jobs bill that has been blocked by Republicans in Congress, as well as the restoration of a $5.50 fee on Canadian travelers arriving in the U.S. by plane or ship.

Harper said such decisions were being made for “domestic political reasons” rather than animosity toward Canada. “This is simply the political season in the United States,” the prime minister said.

The two countries will announce further details in the “very near future” on border measures to enhance security and encourage trade, he added.

Harper also held a bilateral meeting with Chinese President Hu Jintao at the summit, and pressed the need for increased trade.

To contact the reporter on this story: Andrew Mayeda in Ottawa at amayeda@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

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