A North American Free Trade Agreement (Nafta) among the U.S., Canada, and Mexico will benefit the Canadian oil industry, say industry spokesmen and analysts.
The agreement, which has been signed by political leaders but must be ratified by legislators in each country, is expected to improve markets for Canadian natural gas and a wider range of petrochemicals.
The Independent Petroleum Association of Canada expects the deal to increase sales of U.S. gas to Mexico and thus open U.S. markets for more Canadian gas.
"If Nafta strengthens the Mexican economy, gas demand there will increase," said IPAC Executive Director Gerry Protti.
"Diverting more American gas to Mexico puts upward pressure on the price of gas in the U.S. and opens the U.S. market for more Canadian gas."
A statement by Ottawa said the trade deal contains "clearer disciplines on energy regulators to avoid discriminatory actions and to minimize disruption of contractual agreements."
Alberta Energy Minister Rick Orman said Nafta will help Alberta settle a dispute with the California Public Utilities Commission (CPUC) involving gas sales to that state of about 1 bcfd. He said regulatory rulings affecting gas sales contracts would be subject to a trade dispute settlement process.
Ian Smyth, president of the Canadian Petroleum Association, said, "Clearly, the U.S. government intends that unilateral action of the kind taken by CPUC will not be tolerated."
Cambridge Energy Research Associates Inc., Boston and Arthur Andersen & Co. issued research reports indicating the agreement will increase natural gas exports from the U.S. Southwest to Mexico.
The agreement also specifies that Canada, the U.S., and Mexico cannot impose minimum or maximum prices on energy and petrochemical imports or exports.
The Canadian petrochemical and service sectors said the deal will open new potential for trade in goods and services for Canadian companies.
Gerry Finn, chairman of the Canadian Chemical Producers Association trade committee, said the deal will help to establish a market-driven North American trade in petrochemicals.
The association said chemical trade between Canada and the U.S. is not large, but it hopes the agreement will lead to increased market access.
Dow Chemical Canada Inc. said it does not see immediate gains from the deal. But the agreement protects some of the gains made by Canadian companies in the earlier Canada-U.S. Free Trade Agreement.
The agreement substantially reduces the number of chemical products closed to foreign investment under the Mexican constitution.
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