Canadian Manufacturing

Federal aid for oil sector still in development, three months later

Natural Resources Minister Seamus O'Regan says he wants the loans to be ready as soon as possible

June 17, 2020  The Canadian Press

OTTAWA — The Canadian Association of Petroleum Producers says if bridge loans for smaller oil and gas companies aren’t ready to flow soon some companies will have to turn to less-safe options to survive the COVID-19 slowdown.

Ben Brunnen, CAPP’s vice-president of fiscal and economic policy, says he knows the Business Development Bank of Canada and Export Development Canada are working hard to get the terms of their loan programs together.

But it has been almost three months since Finance Minister Bill Morneau said the help was coming in “hours, potentially days” and still not a single company has been approved for financing.

Both agencies are looking at programs that backstop loans from a company’s normal bank or lending company, which Brunnen says is making the design a little more complex.

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The global economic slowdown from the pandemic saw the world’s oil demand fall by more than one-sixth this spring, and Brunnen says in Canada most companies don’t expect to be anywhere close to pre-pandemic production levels until well into next year.

Natural Resources Minister Seamus O’Regan says he wants the loans to be ready as soon as possible but says he also has been told that the government’s COVID-19 wage subsidy has been very helpful in keeping oil companies afloat while they wait.