China emerging as top customer for Canadian oil shipped via Trans Mountain Pipeline

Thomson Reuters

· Posted: May 16, 2025 4:37 PM EDT | Last Updated: 13 minutes ago

China has emerged arsenic the apical lawsuit for Canadian lipid shipped connected the expanded Trans Mountain Pipeline, vessel tracking information shows, arsenic a U.S. commercialized warfare has shifted crude flows successful the twelvemonth since the pipeline started operating.

China's caller involvement successful Canadian lipid comes arsenic U.S. President Donald Trump's commercialized warfare has strained relations betwixt longtime allies Washington and Ottawa. It besides reflects the interaction of U.S. sanctions connected crude from countries similar Russia and Venezuela.

Canada is the world's fourth-largest lipid producer, but its main oil-producing state of  Alberta is landlocked with constricted entree to tidewater ports. That means the bulk of Canadian lipid — astir four million barrels per time oregon 90 per cent — is exported to the U.S. via pipelines that tally north-south.

The $34-billion Trans Mountain Pipeline carries oil to the Pacific Coast wherever it tin beryllium loaded onto tankers for export. The expansion, which began operations connected May 1, 2024, tripled the pipeline's capableness to 890,000 barrels per time and opened opportunities for Canadian lipid on the U.S. West Coast and successful Asian markets.

Canada seeks to diversify exports

While lipid is presently exempt from U.S. tariffs, Canada has sought to diversify its exports owed to little U.S. duties connected its crude and Trump's threats to annex the country.

Canada shipped astir 207,000 barrels per time (bpd) connected mean to China since the Trans Mountain enlargement ramped up to afloat operations successful June past year, vessel tracking information connected Kpler showed. That was a immense summation from an mean of astir 7,000 bpd successful the decennary to 2023.

The U.S. took astir 173,000 bpd from the pipeline successful the aforesaid period.

China's apical spot arsenic the TMX purchaser defies immoderate aboriginal expectations that the U.S. would beryllium the biggest purchaser of crude shipped via the pipeline, which is owned by the Canadian government.

Many expected its barrels to onshore connected the West Coast versus Asia, which has entree to cheaper Russian oil.

However, Trump's protectionist policies person successful caller months made Canada much charismatic to Chinese buyers, said Philippe Rheault, manager of the China Institute astatine the University of Alberta.

China has besides been reluctant to beryllium over-reliant connected Russian vigor supplies, Rheault said.

"A batch of China's refineries are besides mindful of U.S. sanctions, and truthful person been trying to diversify distant from lipid from Venezuela and different places," helium said.

Shifting flows

In the twelvemonth since the pipeline's expansion, Canadian exports of crude to countries different than the U.S. roseate astir 60 per cent to an yearly grounds of astir 183,000 bpd successful 2024, according to Statistics Canada.

Other nations taking Canadian crude see South Korea, Japan, India, Brunei and Taiwan, vessel tracking information showed.

In caller months, respective Canadian politicians person called for caller pipelines to coastal export terminals to trim dependency connected the U.S. But regulatory, fiscal and governmental hurdles proceed to stifle that development.

TMX was astir 77 per cent full connected mean successful 2024, according to documents it filed with the Canada Energy Regulator, beneath the 83 per cent the institution forecast, successful portion owed to the precocious tolls the relation has been charging to marque up for outgo overruns during construction.

The pipeline is expected to beryllium 84 per cent full this year, and ramp up to 92 per cent in 2027.

Its operator, Trans Mountain Corp, has said it is looking astatine enlargement projects that could adhd betwixt 200,000 and 300,000 bpd of capableness to the system.

Given China's accrued tendency to find new, unchangeable supplies of crude, the bulk of immoderate further capableness connected TMX is apt to spell to Asia alternatively than the U.S. West Coast, said Skip York, main vigor strategist with Turner, Mason & Company.

"I deliberation you're going to spot virtually each of those incremental vessels travel west" for export to China, helium said.