Venezuelan former police officer Williams Cancino touches a Venezuelan flag during an interview with AFP after deserting from the armed forces in 2019, in Norte de Santander, Colombia on January 5, 2026. (Photo by Raul ARBOLEDA / AFP via Getty Images)
Paul Rowan Brian
News Analysis
With the recent change in leadership in Venezuela and the prospect of a revitalization of oil projects in the country, there’s speculation about what this could mean for Canada’s oil industry if its largest customer, the United States, can get cheaper crude oil from Venezuela in the years to come.
Washington has floated a plan for American oil companies to help revamp Venezuelan oil exploration and development, with U.S. President Donald Trump saying, “We’ll be selling large amounts of oil to other countries.”
There were already jitters on financial markets on Jan. 5, the first day of trading after the United States conducted the military operation in the South American nation, capturing its leader. The stocks of several major Canadian oil companies took a hit on the Toronto Stock Exchange early on Jan. 5, with companies such as the Canadian Natural Resources Ltd. and Cenovus seeing 5 percent declines.
Over the previous years, as oil exports from Venezuela to the United States declined amid corruption scandals and sanctions, exports from Canada to its southern neighbour ramped up.
Richard Masson, executive fellow at the University of Calgary School of Public Policy, says that Canada’s prospects for continuing to ship oil south remain secure, as it will take years and significant investment in the billions of dollars for Venezuela to ramp up production. But he adds that Canada shouldn’t fall behind in developing more capability for export.
“There’ll be a little bit more Venezuelan crude going to the Gulf Coast. But that doesn’t mean any big deal for Canada, as long as we can find other places to sell our oil, like through Trans Mountain, we can sell more to Asia,” Masson told The Epoch Times.
Heather Exner-Pirot, director of energy, natural resources, and environment at the think tank Macdonald-Laurier Institute, similarly says that Canada remains in a fairly strong position.
“Capital is cowardly and shy and I don’t think Venezuela will be a particularly attractive destination for a while,” Exner-Pirot posted on X. “It has experienced poor governance and corruption for a long time, has a history of nationalizing industry, and there will be a large socialist faction even more radicalized against the USA.”
Venezuelan Oil
Venezuela has the biggest proven oil reserves in the world, estimated at 303 billion barrels. However, the rise of the late socialist leader Hugo Chávez in 1999 led to an expansion of state control over the country’s oil and gas company Petróleos de Venezuela, followed by a considerable decline in production capacity and fall in foreign investment. Following Chávez’s death in 2013, sanctions along with widespread corruption and economic difficulty led to a further sharp decline in Venezuela’s oil output under his successor, Nicolás Maduro. Maduro and his wife Cilia Flores were captured by U.S. forces on Jan. 3 and are facing narco-terrorism charges in the United States.
Venezuela produced an estimated 1.1 million barrels per day of crude oil in November of last year, compared to Canada’s estimated production of around 5.1 million barrels per day of crude oil in 2024.
Venezuela has certain advantages over Canada on the technical side, due to warmer ground temperatures making its heavy crude easier to get out of the ground and oil locations being closer to tidewater.
An oil tanker sails on Lake Maracaibo, in Cabimas, Venezuela, on Oct. 14, 2022. Issac Urrutia/Reuters
Masson noted that there are no scheduled Venezuelan oil tankers leaving the country at this time due to sanctions, and that the Venezuela’s reserves will take years of political stability and investment to be brought back fully online.
“It’s a disaster down there that’s taken decades to come to this point, and it’s a long ways from taking out Maduro to the disaster being fixed,” Masson said. “It’s going to take billions of dollars of investment—tens of billions or hundreds of billions of dollars—and years to see Venezuelan production increase.”
Masson added that he believes Canada’s Jan. 5 stock market dip is an overreaction that doesn’t appear linked to a solid understanding of the strength of Canada’s position in terms of the oil market.
He said that refineries on the U.S. Gulf Coast were designed to process heavy crude oil from Venezuela and Mexico’s Maya variety. However, as Venezuela’s oil exports declined and Mexico began exporting more to countries like China, Canada stepped in to satisfy demand. He said that even if some Venezuelan supplies begin returning to the Gulf Coast, Canada will remain as a core consistent supplier to the United States.
“Just because you have large reserves doesn’t mean they can be produced,” Masson said. “These are very difficult reserves, and Venezuela has often, over the last number of years, been listed as one of the least desirable places to invest because of all the internal issues.”
Missed Opportunities
At the same time as he sees Canada remaining a reliable supplier of crude oil to U.S. refineries, Masson says there have “absolutely” been missed opportunities that have occurred between Canada and the United States in terms of the oil industry.
“I think we’ve messed up many things in Canada and the U.S. If Keystone had been approved, we’d be sending them another million barrels a day of diluted bitumen, which is exactly what they’re after,” he said. “We can absolutely do better if we work together.”
For her part, Alberta Premier Danielle Smith said that the ouster of Maduro and the potential change in the oil industry in Venezuela shows the importance of building more pipelines to ship Alberta’s oil to international markets.
“Recent events surrounding Venezuelan dictator Nicolas Maduro emphasize the importance that we expedite the development of pipelines to diversify our oil export markets,” Smith posted Jan. 5 on X. “Alberta supports building pipelines in all directions to get our product to market and we look forward to continuing to work with provincial and federal partners to advance these projects.”
Exner-Pirot echoed these sentiments, writing that “we should build a NW BC pipeline to Asian markets in the medium term.”
Alberta and Ottawa signed a memorandum of understanding Nov. 27 proposing to build one or more pipelines from Alberta to the B.C. coast if a private proponent comes forward.