Daily Management Review

Canadian oil industry turns to government for help


The coronavirus pandemic and the oil war between Saudi Arabia and Russia resulted in a huge excess of supply over demand in the global energy market. After a landslide in energy prices, the US-oriented oil and gas industry in Canada found itself in a state of crisis and so required government assistance.

Falling demand and a collapse in oil prices plunged Canada's oil and gas industry into a crisis that requires urgent action by the Alberta government and central authorities.

“We must prepare for difficult times that we have not seen in our province since the 1930s,” Alberta’s Prime Minister Jason Kenney told media representatives.

Canadian oilmen need state assistance, as they now have to survive in low prices, a lack of export capacity and an unfavorable investment climate.

Last week, Globe and Mail, citing its own sources, said the Canadian government was ready to provide multi-billion dollar financial assistance to the oil and gas industry. Measures proposed by the government include access to cheap loans - primarily for small and medium-sized companies and jobs for those oil workers who lose their jobs during the crisis.

The Alberta government is discussing the possibility of receiving assistance from the central authorities, which could be C $ 15 billion ($ 10.43 billion). Canadian oil companies also do not sit silently. According to Globe and Mail, 65 top managers of oil and gas companies sent a letter to Prime Minister of Canada Justin Trudeau asking them to create an analogue of the U.S. Asset Buyout Program. This program allows buying back the assets of companies that are "in financial difficulty." In addition, it is proposed to temporarily abolish the carbon tax and all income taxes.

More than 100,000 Canadians work in Canadian oil companies, so the letter urges managers at all levels to come together to overcome the crisis, because "Not a single Canadian, household, business or organization’s welfare should be worse than what it was before crisis."

Many experts doubt that the funds that the government can allocate are enough to save the Canadian oil industry in a crisis.

source: theglobeandmail.com