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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Canada Prepares Multi-Billion Dollar Bailout For Its Oil Industry

The federal government of Canada is preparing a multibillion dollar financial aid package for the oil and gas industry and could announce it as soon as next week, the Globe and Mail reports, citing unnamed sources.

Among the measures discussed were access to more credit, especially for smaller businesses, and job creation for the workers who will likely be laid off amid the price crisis.

One source told the Globe and Mail that Ottawa has prepared US$10.43 billion (C$15 billion) in financial aid for the industry, which, already struggling with low local crude prices, a pipeline shortage and a hostile investment environment has now been brought to its knees by the combination of weak demand created by the Covid-19 outbreak and the oil price war started by Saudi Arabia earlier this month.

The local benchmark, Western Canadian Select, yesterday dived to $5.430 a barrel, losing more than 50 percent of its value in a day. Also yesterday, Premier Jason Kenney warned that t Alberta’s oil and gas industry was “on life support”.

"We must begin to prepare ourselves for a time of adversity unlike any we have seen since the 1930s in this province," Kenney told media, after earlier this month he announced plans for government support for oil and gas companies focusing on low-interest credits until the worst of the crisis passes.

The provincial government has been discussing the credit aid package with Ottawa, too. The industry is taking part as well. The Globe and Mail reports a letter signed by 65 industry executives asking Prime Minister Justin Trudeau to set up an equivalent to the U.S. Troubled Asset Relief Program and use it to buy distressed assets. In addition, the industry is asking for a suspension of the carbon tax and all income taxes.

“Our companies collectively represent over 100,000 working Canadians,” the executive wrote. They called for "all levels of government to work together toward one goal: no Canadian, household, business or organization is left worse off than where they were when this crisis began.”

By Irina Slav for Oilprice.com

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Leave a comment
  • Nessy Oil on March 20 2020 said:
    Even this won’t be enough. The oilsands are dead. Time to move on with life here in Canada. Trust me I’m an oilsands supporter. But it’s done. Don’t throw good money at a dead horse
  • Brett Blaikie on March 21 2020 said:
    why would a "supporter" cite anti oil and gas talking points? this fight is not about supply and demand it's about market share and geopolitics. oil and gas will be around a century from now given current and foreseeable technology - demand will taper off late in the century as world population levels out around the eleven billion mark... and no wars or plagues we've ever seen would change anything but the dates, once you're over two billion nothing we've ever seen stops population growth including the police state in China imposing a One Child Policy. there are only two states in which world population is relatively stable or growth negative: a primitive state where 50% of the male population dies of violence and 50% of the female population dies of violence and childbirth - or a wealthy industrialized democracy which creates a demographic inversion: the fascist environmental movement attempts to re-install feudalism on behalf of their billionaire masters (like the useful idiots they are) will fail, as similar attempts failed in the last century. It has already been pointed out elsewhere on this site that Saudi Arabia will have trouble keeping up any sort of increased production (even if their finances allowed) while Russia pays the help in rubles which it can manipulate with little interference because it is already the bad boy of geopolitics and (key point here) Europe in particular wants its oil and gas. US shale is huge but short-lived: too many holes and too many bucks for fracking even if they are permitted to continue fracking (they will be they have only Biden and Trump to worry about now that Sanders sidelined himself babbling about Castro) Canadian oil and gas will be around when you and I are long gone.
  • JJ Louis on March 21 2020 said:
    Ridiculous giving money to these companies, unless it is with a lot of strings attached. Brett Blaikie, 100 years from now? Only because there is a dead world anyways. As all those or most working in the oil patch, why should they care about the future of the planet and what their children and grand children have to deal with?
  • keith casey on March 23 2020 said:
    the Canada oil sector will shine again very very soon.

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