Canadian Oil Tycoon Proposes Aiding US In Venezuela’s Oil Revival

A Canadian tycoon who heads one of North America’s fastest-growing oil companies is advocating for his country to lend its heavy-oil expertise to the United States as it seeks to rebuild Venezuela’s oil industry.

The comments by Adam Waterous, one of Canada’s most aggressive oil industry dealmakers and the executive chair of Strathcona Resources (SCR.TO), show a surprising willingness to support U.S. President Donald Trump despite his trade war with Canada and the potential for Venezuelan crude to displace some Canadian oil in the U.S. market.

Canada is the world’s fourth-largest oil producer. It is the top global producer of heavy crude oil, similar in quality to Venezuelan oil, which it pumps from its oil sands.

Waterous said Canada’s decades of experience extracting oil sands crude make it uniquely qualified to assist in Venezuela, and gives Canada something to offer Trump ahead of expected trilateral trade talks later this year.

“We are better positioned than any country in the world, by far, to help rebuild,” Waterous said in an interview.

“I would expect, but I don’t know, that an offer of assistance would probably be welcome.”

Strathcona is not looking to invest in Venezuela, Waterous said. But helping to rebuild Venezuela’s oil industry is an opportunity for Canada to help the United States at a time when Trump’s trade policy has strained relations between the two countries, he said.

Willing to send technical team

Trump summoned U.S. oil executives last week to the White House to discuss Venezuela. No Canadian companies attended.

“I didn’t get invited, and it’s not the Canadian industry’s role to call Donald Trump and say, ‘do you want some help?’ But I do think there’s an opportunity,” Waterous said.

Waterous — who attended Harvard University and has U.S. links through former President George W. Bush’s son-in-law Henry Hager, who serves as Strathcona’s managing director — said he would quickly assemble a technical team from his company to go to Venezuela if asked.

“I’m sure there’s not a heavy oil company in Canada that would say no,” he said.

Strathcona is Canada’s fifth-largest oil producer, which Waterous — a former banker as well as the founder and managing partner of private equity firm Waterous Energy Fund — built from scratch.

The company uses steam-assisted technology to extract heavy oil from its assets in the Cold Lake region of Alberta as well as Lloydminster, Saskatchewan.

Known for his aggressive deal-making and outspoken style, the billionaire Waterous shook up Canada’s oil patch last year by launching a heated takeover fight for MEG Energy with larger oil sands competitor Cenovus.

While he was ultimately unsuccessful in purchasing MEG, Waterous later announced he aims to more than double Strathcona’s production to 300,000 bpd by 2035 — a rate of growth that would far exceed any of the company’s peers.

Trade review pending

The Canada-United States-Mexico Agreement, which has shielded much of Canada’s exports from U.S. tariffs, is up for joint review this year, and some investors have suggested a potential increase in Venezuelan oil flows to the United States could weaken Canada’s leverage.

Canadian Prime Minister Mark Carney raised the prospect of reviving the Keystone XL oil pipeline from Alberta to the United States during a meeting with Trump earlier this year as he sought a way to address painful U.S. tariffs on steel, autos and other goods.

Waterous said Canada should now try to use its heavy crude expertise. The long-term risk of the U.S. buying Venezuelan crude also increases the need for Canada to diversify its markets and build another pipeline to the Pacific, he said.

Canada exports about 90% of its crude to the U.S., but market analysts have suggested a significant increase in Venezuelan heavy crude production would directly compete over time with Canadian barrels refined on the U.S. Gulf Coast.

A spokesperson for Canada’s natural resources ministry said the ministry had not offered Trump help with Venezuela’s oil sector.

The discount on heavy Canadian crude to U.S. oil widened by 14% last week, while shares of Strathcona and other Canadian heavy oil producers fell on investor worries about a revival of Venezuela’s oil sector.