Canada and Israel this week signed a new energy agreement that has the potential to massively benefit both countries economically.
Natural Resources Minister Joe Oliver is scheduled to complete a weeklong economic mission to the Jewish state on Saturday. While in Israel he met with top Israeli energy sector officials, concluded the June 26 agreement with his counterpart, Uzi Landau, Israel’s minister of energy and water resources, and met with Israeli Prime Minister Benjamin Netanyahu.
“There’s significant untapped potential in trade with Israel,” Oliver said.
The text of the agreement, while non-specific, states that both countries will try to meet bilaterally “to discuss energy cooperation by taking advantage of opportunities when both are present at major energy events and fora.”
Speaking to reporters via conference call from Haifa on June 28, Oliver said he expected Landau to visit Canada sometime in the fall to gather further “information and build relationships in the energy and natural resources sectors.”
The recent discoveries of major oil and natural gas deposits both onshore and offshore in Israel mean the tiny state could become energy independent in the near future.
Experts estimate that the Shfela Basin, located about 30 kilometres southwest of Jerusalem, contains more than 250 billion barrels of shale oil. That would place Israel third globally in shale oil resources, behind only the United States and China. The resource is also as big as the 250 billion barrels of conventional oil reserves in Saudi Arabia.
As a result, the potential for increased bilateral trade and investment by both Canadian and Israeli energy sector players is encouraging, Oliver said.
While development and yield from these sites are still years away, Israel could become one of the world’s major suppliers of oil and gas, as well as providing for its own energy needs.
Asked if Canada is seen as a preferred energy partner by Israel because of its longstanding support for the Jewish state, Oliver told The CJN while it's true the Israelis are “deeply appreciative” of their Canadian ally, this is about business.
“My focus was looking at ways that could profit both countries,” he said, noting that this trip was a direct result of Netanyahu’s visit to Ottawa last March.
At the time, Oliver said, the Israeli prime minister told the government that the only thing Canada and Israel, as friends, could do more of was to create business opportunities.
Netanyahu, he said, wants to see Canadian-Israeli business in the energy sector make advances.
Now that Israel has found “very significant” offshore gas and onshore oil shale, Canada could leverage its years of experience in energy production and extraction technologies to deepen economic ties, Oliver said.
Various Canadian energy sector companies are already in Israel helping the country navigate its hoped-for energy boom, he said.
Another important part of the new agreement says it will see Israel and Canada strive to “reduce environmental impacts and improve practices for the responsible development and use of new sources of oil and gas supplies.”
Oliver said this had implications for the science and technology sectors in both countries, which will help develop better “clean” and “green” technology for use in the energy sector.
The countries will also share knowledge and “lessons learned” during the development of their respective energy sectors on a regular basis. Details of how this would be done have not yet been worked out.
Oliver said the existing Canada-Israel Free Trade Agreement (CIFTA), which came into force in 1997, might end up being expanded as a result of the new agreement on energy between the countries.
He said CIFTA could be “deepened on the service side. There’s a potential to make it more comprehensive and robust.”
According to Foreign Affairs and International Trade Canada, CIFTA initially was designed to eliminate tariffs on all industrial products manufactured in Canada and Israel as well as a limited number of agricultural and fisheries products. By 2003, it was expanded to include tariff preferences on “agricultural, agri-food and fish goods.”
As of 2010, bilateral merchandise trade has risen from $507.3 million in 1996 to $1.4 billion in 2010, an increase of 177 per cent.
Main exports from Canada include precious stones, paper and newsprint, machinery, electrical and electronic machinery, salt and sulphur. Imports from Israel include pharmaceutical products, electrical and electronic machinery, precious stones, scientific and precision instruments and machinery.
Currently, CIFTA doesn’t have “substantive provisions in areas such as services, investment and government procurement, nor does it have parallel agreements on labour co-operation or the environment,” according to Natural Resources Canada.
“It makes sense to make CIFTA more comprehensive because we want to increase our commercial relationship with Israel,” Oliver said. “When Israelis think of Canada now, they can think of a good place to invest.”
Canada also stands to gain more recognition as a world leader in energy management and innovation through this new agreement, Oliver said.
The Centre for Israel and Jewish Affairs (CIJA) commended Oliver on his mission.
“This agreement provides an opportunity to leverage Canadian expertise for the goal of Israeli energy independence. For Canada, it offers greater access to a burgeoning marketplace of both customers and innovators – both crucial for creating Canadian jobs in a fragile global economy,” David Koschitzky, CIJA’s chair, said in a statement.