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

Canada will make it a priority to increase energy exports to Asia 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 today, according to a transcript e-mailed by his office of remarks he made at a news conference at the Asia Pacific Economic Cooperation forum in Honolulu.

Harper said he conveyed that message at a bilateral meeting with Chinese President Hu Jintao at the summit.

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.”

“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.

Meeting Obama

He made the comments before a meeting in Honolulu with President Barack 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. TransCanada Corp. (TRP) has said it is studying alternative routes in an attempt to salvage the pipeline.

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.

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