CANADA has warned the Bush administration that massive oil reserves in Alberta could be exported to China if the American Government refuses to climb down in a trade dispute over Canadian timber exports to the US.

Canada’s Natural Resources Minister, John McCallum, raised the trade tension with Washington over the weekend with claims that exports of crude oil to China from Alberta oil sands deposits could reach 450,000 barrels per day within six years.

Mr McCallum said that he had meetings last week in Beijing with China National Petroleum Corporation and CNOOC, who both expressed strong interest in investing in oil sands: “Clearly they are ambitious in their thinking. They are definitely interested.”

A Canadian pipeline company is already planning the oil export route, a $3.4 billion (£1.9 billion) steel pipe linking Edmonton in Alberta with a terminal at Kitimat on the Pacific coast. In theory, the oil from the Albertan sands could head south to California but Petro-China, which is owned by China National, has already signed a preliminary deal to take 200,000 barrels per day across the Pacific.

Canada’s energetic courting of Chinese oil investors is being seen as part of an attempt to force trade protectionists in Washington to bring down tariff barriers imposed on some $6 billion of Canadian timber imports. America has ignored two rulings by North American Free Trade Agreement panels that the tariffs are illegal.

Ottawa hopes that the threatened diversion of North American oil resources to China will overwhelm the American timber lobby and trade protectionists on Capitol Hill. Private American timber firms have long protested that Canadian exporters benefit from a subsidy by sourcing wood from government-owned forests in Canada. However, the US takes a proprietorial interest in Canadian oil, which accounts for almost 10 per cent of America’s daily diet of crude.

The oil locked in the sands of northern Alberta is the largest known deposit of hydrocarbons on the planet and the Canadian Government reckons that 300 billion barrels could be extracted — more than the declared reserves of Saudi Arabia.

Energy multinationals are flocking to Fort McMurray. Shell is investing some $6 billion into its oil sands mining operations and Total, the French oil giant, has also taken a stake recently. Chinese oil companies have been prowling the area for a year.

In September President Hu Jintao visited Canada and spoke of a “strategic partnership” between the two countries. CNOOC has already acquired a shareholding in MEG Energy, a company with proprietary oil sands technology, and in May Sinopec paid $105 million for a stake in the Northern Lights oil sands project.

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