Canada’s oil exports to Asia surge, renewing calls for new pipeline capacity

CALGARY — While Canada’s oil industry is posting record production and rapidly expanding sales into Asia, the case for the country needing new pipeline capacity to sustain the push beyond the US market has never been greater.Exports to China more than quadrupled last year after the Trans Mountain Expansion (TMX) pipeline opened in May 2024, allowing crude from Alberta’s oil sands to reach the Pacific coast for the first time at scale.Oil production averaged a record 5.19 million barrels per day in the first half of 2025, according to the Canada Energy Regulator, as producers boosted output and shareholder returns despite weak global prices.The surge into the Asian market has helped Canadian producers reduce their historic dependence on the United States — which still took 96% of Canadian oil exports in 2024 — at a time of economic and geopolitical uncertainty. US President Donald Trump’s continuous threats to impose tariffs on Canadian goods has sharpened Ottawa’s focus on diversifying the economy, with Prime Minister Mark Carney having pitched Canada as an “energy superpower” on the global stage, and recently visiting China to promote a “strategic partnership.”.UPDATED: Smith demands Carney approve pipeline by fall.Carney is also expected to make an upcoming trip to India, where Energy and Natural Resources Minister Tim Hodgson recently pledged to deepen trade in oil and gas between the two countries.Canadian crude is now emerging as a reliable alternative for Asian refiners, in particular the Chinese, who are looking to move away from the volatile situation in Venezuela after the removal of formerpresident Nicolás Maduro by US forces.“Canadian producers have a brand of reliability,” Heather Exner-Pirot, Director of Energy, Natural Resources and Environment at the Macdonald-Laurier Institute, has said.“Does Venezuela? It does not.”However, the limits of Canada’s pipeline system are beginning to show.Enbridge has increased rationing on its Mainline system to the US, while the Trans Mountain Expansion (TMX) is operating above 90% capacity, leaving little room to absorb outages, production growth, or shifts in global demand..The Financial Post recently reported that Enbridge imposed its steepest apportionment since before TMX opened, forcing shippers to cut requested volumes by more than 20%.The tightening has widened discounts for Canadian heavy crude at a time when prices are under pressure from a global supply glut, including new barrels from Venezuela following regime change there.Although TMX has reduced the average discount since coming online, analysts warn the relief may prove temporary without additional export capacity in light of demand.In recent months, political figures such as Alberta Premier Danielle Smith have been increasingly vocal about adding to Canada’s pipeline capacity, such as signing a memorandum of understanding with Carney that proposed a new one-million-barrels-per-day bitumen pipeline to the BC coast.At an EnergyNow Insights event last week, Smith referenced her last visit to Asia, saying there is “huge potential” in the market there.“During my most recent visit, our partners [in South Korea] have told us that they’ll buy about as much [bitumen] as we can send them,” Smith said.“Expanding access to markets across the Pacific is essential to Alberta’s strategy to diversify our customer base, and we’re doing everything we can to secure those partnerships. Alberta’s abundant energy reserves and our well-established record as a trustworthy supplier make us a pretty appealing partner in a world where energy matters more than ever.”.Canadian oil prices fall in wake of Maduro capture as Smith emphasizes importance of pipelines .Ontario Premier Doug Ford has also called for pipelines “in every direction” to move Canadian oil to global markets.A recent KPMG survey also found that 87% of energy and natural resources executives support building a west-to-east pipeline to reduce reliance on the US, signalling that the business community appears to be on board.Analysts at the Asia Pacific Foundation of Canada (APFC) have argued that Canada has a clear opening in the Indo-Pacific region, where refiners are seeking substitutes for declining supplies of Venezuelan and Saudi heavy crude.Canada’s oil is technically well suited to those refineries, but logistical hurdles, tolls, and limited pipeline capacity in Canada could continue to constrain growth.Without new infrastructure, the APFC warns, Canada risks leaving value on the table just as uncertain geopolitical events are reshaping global energy flows.The question now confronting federal policymakers is whether Canada is willing to build enough capacity to make that shift durable — or whether pipeline scarcity will hinder Canada’s future role in global energy markets.

Canada’s oil exports to Asia surge, renewing calls for new pipeline capacity

Related Stories