Canada Races to Expand Its Footprint in Asia¡¯s Energy Market
2026-1-29
For decades, fossil fuel exports have been a major driver of Canada¡¯s economy, with oil and gas shipments accounting for approximately 25% of the country¡¯s total exports. Canada¡¯s energy market, however, suffers from a critical flaw: nearly all of its fossil fuel exports are destined for the United States. Recent strained US-Canada relations have laid bare the geopolitical vulnerabilities of Canada¡¯s energy sector, prompting the country to accelerate its efforts to expand into Asia¡¯s energy market.
In 2025, the Trump administration imposed a 25% tariff on most Canadian goods and a 10% tariff on energy products. Against this backdrop, Canada has ramped up interactions with Asian countries in a bid to address the fallouts from the deteriorating US-Canada trade ties. Bolstered by expanded export capacity and sustained growth in Asian demand, Canadian oil, liquefied natural gas (LNG) and nuclear technologies are increasingly flowing to markets outside the US. This shift is also reshaping Asia¡¯s trade landscape: it offers new supply options for buyers while mitigating the political and commercial risks faced by Canada¡¯s energy sector due to its overreliance on a single key customer.
In October 2025, Canadian Prime Minister Mark Carney attended the ASEAN Summit in Kuala Lumpur, where Canada and Malaysia signed a letter of intent covering cooperation in LNG, oil, small modular reactors (SMRs) and renewable energy. Building on Canada¡¯s first LNG export to Asia from Kitimat in July 2025, the agreement aims to lay the groundwork for Canada¡¯s long-term energy exports to Southeast Asia. Canada is also pushing ahead with negotiations for the Canada-ASEAN Free Trade Agreement, targeting greater access to Southeast Asia¡¯s $5 trillion market. The proposed agreement will cut tariffs, reduce non-tariff barriers and enhance investment protection for Canadian enterprises. Negotiators have held multiple rounds of talks, and officials stated that progress on reaching a deal is expected this year, which will particularly boost energy sales.
Meanwhile, Asia has emerged as a major buyer of Canadian oil following the launch of the Trans Mountain Pipeline Expansion Project in May 2024. The project has nearly tripled Canada¡¯s oil pipeline capacity to 890,000 barrels per day and provides access to the Westridge Marine Terminal, opening a direct export route for Canada to the Asian market and reducing its dependence on US buyers. Approximately 75% of the crude oil loaded at the Westridge Terminal is heavy sour crude, which is well-suited for complex refineries in Asia. The terminal currently handles up to 34 Aframax tankers per month, and its utilization rate is expected to rise further with increasing production and the rollout of expansion plans around 2027.
In 2025, the Trump administration imposed a 25% tariff on most Canadian goods and a 10% tariff on energy products. Against this backdrop, Canada has ramped up interactions with Asian countries in a bid to address the fallouts from the deteriorating US-Canada trade ties. Bolstered by expanded export capacity and sustained growth in Asian demand, Canadian oil, liquefied natural gas (LNG) and nuclear technologies are increasingly flowing to markets outside the US. This shift is also reshaping Asia¡¯s trade landscape: it offers new supply options for buyers while mitigating the political and commercial risks faced by Canada¡¯s energy sector due to its overreliance on a single key customer.
In October 2025, Canadian Prime Minister Mark Carney attended the ASEAN Summit in Kuala Lumpur, where Canada and Malaysia signed a letter of intent covering cooperation in LNG, oil, small modular reactors (SMRs) and renewable energy. Building on Canada¡¯s first LNG export to Asia from Kitimat in July 2025, the agreement aims to lay the groundwork for Canada¡¯s long-term energy exports to Southeast Asia. Canada is also pushing ahead with negotiations for the Canada-ASEAN Free Trade Agreement, targeting greater access to Southeast Asia¡¯s $5 trillion market. The proposed agreement will cut tariffs, reduce non-tariff barriers and enhance investment protection for Canadian enterprises. Negotiators have held multiple rounds of talks, and officials stated that progress on reaching a deal is expected this year, which will particularly boost energy sales.
Meanwhile, Asia has emerged as a major buyer of Canadian oil following the launch of the Trans Mountain Pipeline Expansion Project in May 2024. The project has nearly tripled Canada¡¯s oil pipeline capacity to 890,000 barrels per day and provides access to the Westridge Marine Terminal, opening a direct export route for Canada to the Asian market and reducing its dependence on US buyers. Approximately 75% of the crude oil loaded at the Westridge Terminal is heavy sour crude, which is well-suited for complex refineries in Asia. The terminal currently handles up to 34 Aframax tankers per month, and its utilization rate is expected to rise further with increasing production and the rollout of expansion plans around 2027.