{"id":7907,"date":"2026-09-04T19:13:11","date_gmt":"2026-09-04T19:13:11","guid":{"rendered":"https:\/\/www.rbc.com\/en\/thought-leadership\/?p=7907"},"modified":"2026-09-04T19:31:54","modified_gmt":"2026-09-04T19:31:54","slug":"trade-zone-can-venezuelan-oil-displace-the-oilsands","status":"publish","type":"post","link":"https:\/\/www.rbc.com\/en\/thought-leadership\/geopolitics-trade-and-the-economy\/trade-zone-can-venezuelan-oil-displace-the-oilsands\/","title":{"rendered":"Trade Zone: Can Venezuelan oil displace the oilsands?\u00a0"},"content":{"rendered":"\n\n\t\t\t
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\n\t\t\t\t\n\t\t\tGeopolitics, Trade and the Economy\t\t<\/a>\n\t\t\n\t\t
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\n\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\tTrade Zone: Can Venezuelan oil displace the oilsands?\u00a0\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t<\/h2>\n\t\t\t\n\t\t\t\t\t\t

\n\t\t\t\tTaking a closer look at what America’s heavy crude plans could mean for Canada\t\t\t<\/p>\n\t\t\t\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n

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U.S. President Donald Trump put Canada \u201con notice\u201d with a Venezuela pivot and plan to take control of a portion of the South American country\u2019s oil reserves. <\/p>\n\n\n\n

But can Venezuela realistically displace the oilsands? <\/p>\n\n\n\n

The heavy oil fight<\/h2>\n\n\n\n

Why is heavy oil so important to the U.S.?:<\/strong> T<\/strong>he U.S. cannot easily replace Canadian supply: domestic production is overwhelmingly light, and heavy-crude alternatives from Mexico and Venezuela have structurally declined. <\/p>\n\n\n\n

The Venezuelan-Canadian heavy oil rivalry is not new.<\/strong> The two were vying for space in U.S. refineries in the 1990s and early 2000s <\/s>\u2014but that hasn\u2019t been the case for years. Heavy crude exports from Venezuela to the U.S. has plummeted from more than 1.5 million barrels per day (bpd) in 2000 to negligible levels in recent years. However, since Washington\u2019s toppling of Nicolas Maduro\u2019s regime, Venezuelan crude has pushed back up, hitting  630,000 bpd in June. In contrast, Canada exported more than four-million bpd to the U.S. that month\u2014and it remains the U.S.\u2019s biggest source of imported crude.<\/p>\n\n\n\n

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The cost of boosting production in Venezuela would be staggering.<\/strong> It would require billions in investment over a decade, in part due to the mismanagement of infrastructure and assets in Venezuela from the mid-2000s onward, as well as the aging of many of the country\u2019s most prolific fields, according to the RBC Commodity Strategy Team.   <\/p>\n\n\n\n

A Venezuelan oil comeback \u201cwould likely be slow, expensive and politically fragile,.<\/s>\u201d wrote Shaz Merwat, RBC Thought Leadership Energy Policy Lead in a note<\/a> late last year. <\/p>\n\n\n\n

Most companies are wary of returning to Venezuela\u2014for now.<\/strong> Companies that previously operated in Venezuela have hesitated due to concerns including debt recovery stemming from the sanctions era. ExxonMobil and ConocoPhillips have held off returning to Venezuela after losing billions of dollars\u2019 worth of assets in state expropriations.  <\/p>\n\n\n\n

But some have jumped in.<\/strong>\u00a0U.S. firm Chevron and Italy\u2019s Eni are\u00a0the\u00a0first to return after\u00a0Trump\u2019s\u00a0announcement. Chevron\u2019s\u00a0US$7 billion\u00a0investment\u00a0plan over the next five years could more than double its production in Venezuela to 600,000 barrels per day.\u00a0<\/p>\n\n\n\n

The heavy oil fight will be more\u00a0intense\u00a0in the next few years<\/strong>.\u00a0Venezuela\u2019s supply could rise by 110,000 bpd in 2026 and another 245,000 bpd in 2027, according to the RBC commodity strategy team. With the U.S. claim that it controls 65 billion barrels of proven oil reserves in Venezuela, there\u2019s potential for more, assuming the plan could\u00a0survive\u00a0legal and contractual challenges\u00a0in Venezuela and the U.S., and political shifts in\u00a0both\u00a0countries.\u00a0\u00a0\u00a0<\/p>\n\n\n\n

What does it mean for Canada? <\/strong>Canadian oil firms pumped out a record 5.35 million barrels per day in crude oil production last year, and have largely shrugged off U.S. efforts to resurrect Venezuela\u2019s oil industry. The country\u2019s top energy stocks have continued to rise amid higher oil prices.  <\/p>\n\n\n\n

Canadian oil and gas industry is attracting U.S. and global attention.<\/strong> In recent weeks, firms like KKR<\/a>, <\/a>Apollo<\/a> and Northern Oil and Gas<\/a> have invested in the Canadian industry. LNG Canada\u2019s Phase 2 project\u2014a joint venture comprised of five global energy companies including oil major Shell\u2014is now with the government\u2019s Major Projects Office (MPO) for streamlined approval. <\/p>\n\n\n\n

Canada\u00a0is\u00a0looking\u00a0to Asia<\/strong>.\u00a0Efforts are\u00a0also\u00a0underway\u00a0to\u00a0help Canada\u00a0diversify\u00a0if Venezuela\u00a0boost\u00a0productions\u00a0in a more meaningful way. The\u00a0proposed West Coast Pipeline will bring one million\u00a0bpd\u00a0from Alberta to B.C.,\u00a0targetting\u00a0Asia.\u00a0Regardless of how U.S. policy evolves,\u00a0Canadian\u00a0producers\u00a0are\u00a0positioning themselves\u00a0to\u00a0secure\u00a0diversified market access and greater resilience, amid the rising competition.\u00a0\u00a0<\/p>\n<\/div>\n<\/section>\n\n\n\n

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The week that was<\/h2>\n\n\n\n

Canada and the U.S. traded barbs:<\/strong> U.S. Treasury Secretary Scott Bessent said his country was \u201cnot at war<\/a>\u201d with Canada, mocking the threat it could pose with \u201csubmarines from the Edmonton mall.\u201d Prime Minister Mark Carney said Americans should \u201cstop doing memes<\/a>, stop throwing shade, stop trying to be tough and start being serious.\u201d  <\/p>\n\n\n\n

Republicans backed Trump\u2019s trade war:<\/strong> Republican members of Congress<\/a> met with U.S. Trade Representative Jamieson Greer this week, and generally expressed support for the president\u2019s trade strategy, blaming Carney for walking away from negotiations.  <\/p>\n\n\n\n

Global finance ministers and central bankers met at the G20:<\/strong> China was the lone country that rejected<\/a> parts of a joint statement that was released following the summit, including a paragraph that said countries would \u201ctake steps to eliminate non-market policies and practices.\u201d  <\/p>\n\n\n\n

The Canada Investment Summit draws near, as trade tensions with U.S. loom:<\/strong> Carney and top Canadian CEOs plan to showcase energy, critical minerals, defence and advanced technologies at the investment summit, according to a report.<\/a> <\/p>\n\n\n\n

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