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Quick Context: Russia’s Tiny Place in Canadian Oil Imports
Canada’s Pan-Petroleum Prohibition on Putin’s Prized Product Shines Light on Canadian Foreign Oil Purchases
This Quick Context is a bit different from my regular posts—shorter and event-driven. It’s an example of just one of the additional types of research that I’ll be offering in my premium version of Commodity Context launching soon. Keep your eyes peeled for more announcements and, in the meantime, I’d love to hear from readers about what types of monthly and/or ad hoc research you’d like to see from me.
The Canadian government has banned the import of all Russian oil—both crude and refined.
This ban is largely symbolic given the insignificant volume of imports from Russia, but it is the first official crack in Putin’s energy export revenue stream.
Turns out, Canada hasn’t imported a barrel of Russian crude oil since September 2019.
While Canada did import just more than 10 kbpd of refined petroleum products on average in 2021, Russia does and has always made up a tiny share of total foreign purchases.
Looking at Canada’s historical imports from Russia, virtually all the crude was refined in Newfoundland and Labrador (at one refinery that has since begun transitioning to renewable diesel), while purchases of Russian gasoline have typically ended up in Quebec.
Over the past 48 hours, people have become abnormally interested in Canadian oil imports. Usually, I see this topic come up in pipeline debates—as in, “why are we still importing crude from Saudi Arabia despite producing way more than we consume here at home?” But today it’s because Canada was the first country to announce that it is formally banning the import of Russian oil in response to the invasion of Ukraine.
The phrasing of the initial announcement—"the Government of Canada will ban crude oil imports from Russia” (emphasis added)—confused many because, as even the press release admits, “Canada does not currently import crude oil from Russia” and hasn’t since 2019. The Minister of Natural Resources followed up the next day to clarify that the ban would also apply to refined petroleum products, which Canada does indeed import in small quantities.
Given the kerfuffle, many were reasonably curious about what exactly it is that Canada is buying from Russia when it comes to oil—crude, other petroleum products, etc. It turns out that this is actually a harder question to answer than you might think given the chronic lack of clear Canadian energy data: for example, this data from the Canadian Energy Regulator only captures crude, not products, and also doesn’t give us any look at 2021. (Compared to the data glory that is the US Energy Information Administration’s import dataset, the state of Canadian data is all the more disappointing.)
Anyways, I took the opportunity to dig into the raw trade data and provide a picture of what exactly the Canada-Russia energy trade looks like today.
Canada doesn’t import Russian crude anymore, but it does still purchase some Russian refined petroleum products
The last Russian crude oil shipment imported by Canada arrived in September 2019, but shipments of Russian refined petroleum products have continued to roll through customs into the end of 2021. Gasoline and related blendstock accounted for roughly half the total volume of imported Russian products last year, with a smattering of jet fuel, diesel, petrochemical feedstock, and other oils accounting for the balance.
Canadian imports of both Russian crude and refined products have always been a tiny portion of total foreign purchases
Russian oil accounts for a vanishingly small share of the petroleum Canada has imported historically. As in so many aspects of the oil market, the last decade in Canadian oil trade has been defined by the surge in shale production-enabled crude oil imports, while the steady second-largest source of foreign imports has for a while remained Saudi Arabia.
Russian crude to Newfoundland, refined products to Quebec
The predominant buyer of Russia crude oil in Canada used to be the Come by Chance oil refinery in Newfoundland and Labrador, but the refinery ceased production in the early innings of the COVID shock. The refinery has since been acquired and is transitioning to a renewable diesel plant—so not likely any more Russian crude demand there.
The single largest “loser” of the announced ban on Russian petroleum imports, if there was one, is Quebec, which has for a while now been the largest provincial purchaser of Russian gasoline. Though again, these imports still make up a small volume in the scheme of the Quebec gasoline market.
In conclusion, Canada’s move to ban Russian oil imports is largely symbolic given the insignificant scale of current purchases. This is, however, the first official crack at going after Russia’s energy export lifeline, which, even as of last week, seemed far more sacrosanct than it does today. The other question will be whether other countries even need to follow suit since many private firms are already effectively self-sanctioning Russian oil purchases to both avoid the uncertainty, headache, and acutely elevated risk associated with handling these barrels right now.
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