Alberta eyes Japanese refining investment to boost oil exports, sources say

Alberta Looks to Invest in Japan’s Refining Sector to Diversify Oil Exports

Alberta is exploring the possibility of making a financial investment in Japan’s refining sector in an effort to reduce its heavy reliance on the United States for oil exports. The province’s government is currently in early-stage discussions with Japanese crude oil refiners to potentially fund the construction of a coker unit that would enable the processing of heavy crude from Alberta’s oilsands.

This potential deal with Japan marks a significant shift for Alberta, as the province has never before made energy infrastructure investments in foreign countries. With the recent opening of the Trans Mountain pipeline expansion, which has increased Canada’s capacity to export oil via the Pacific coast, Alberta is eager to boost its oil exports and diversify its markets.

By partnering with Japan, Alberta could increase oil flows on the Trans Mountain pipeline and strengthen the case for a new export pipeline that the province is advocating for. Japan, in turn, would benefit from the ability to process more heavy crude, such as Canadian oil, which is currently incompatible with most of the country’s existing refining facilities.

In addition to enhancing Japan’s refining capacity, increased purchases of Canadian crude could reduce the country’s reliance on oil imports from the Middle East and mitigate the risks associated with shipping through the South China Sea. Canada, as the world’s fourth-largest oil producer, stands to gain from expanded access to Asian markets and reduced dependence on U.S. exports.

The Alberta government has been actively engaging with Asian countries like Japan and South Korea to promote Canadian oil exports. Energy Minister Brian Jean expressed interest in exploring opportunities to sell both light and heavy oil to Japan, but declined to confirm ongoing talks regarding investments in Japan’s refining sector.

The federal government of Canada is supportive of efforts to increase oil exports to Japan and other international markets. Natural Resources Canada (NRCan) is closely monitoring developments and remains open to collaborating with provinces and industry stakeholders to advance strategic energy projects that align with Canada’s national interests.

The expansion of the Trans Mountain pipeline has already facilitated increased oil shipments to Asian markets, with China emerging as the top buyer of Canadian crude followed by the U.S. West Coast. South Korea and Japan have also shown interest in purchasing Canadian oil, signaling a growing demand for Canadian energy products in the region.

As Alberta seeks to boost oil production and explore new export opportunities, the province is actively engaging with pipeline companies to facilitate the construction of new crude oil export conduits. With Canada exporting an average of 4.2 million barrels per day in 2024, efforts to diversify markets and expand export capacity are crucial for the country’s energy sector.

Overall, Alberta’s potential investment in Japan’s refining sector represents a strategic move to diversify oil exports, strengthen international partnerships, and create new opportunities for Canada’s energy industry in the global market.