Canada: A Boon To Alberta's Natural Gas Sector: Canada & South Korea Reach Historic Free Trade Agreement

On March 11, 2014, in Seoul, South Korea, Prime Minister Stephen Harper and President Park Geun-hye of South Korea announced that the two countries had concluded negotiations on the Canada-South Korea Free Trade Agreement (CKFTA).

Background & Significance

The CKFTA is Canada's first free trade agreement in Asia and will serve as a gateway into the Asia-Pacific region for Canadian businesses and workers.1 South Korea has an expanding network of free trade agreements and many South Korean companies have strong business relationships in the region.2 The CKFTA will give Canadian companies a strategic base in South Korea from which they can pursue investment and trade opportunities in neighboring countries. For example, deeper commercial interaction between the two countries will put Canadian companies in a better position to team-up with South Korean chaebols (South Korean conglomerates) and other companies in South Korea to pursue opportunities in the region. Furthermore, Canadian companies will be able to more effectively participate in global supply chains, which is an international policy priority for Canada.3

South Korea is currently Canada's seventh largest trade partner and a key market for Canadian natural resource commodities. It is estimated that the CKFTA will result in a 32% increase in Canadian exports to South Korea and boosting Canada's economy by $1.7 billion.4 This will be achieved through a broad array of measures covering practically all aspects of Canada-South Korea trade. A comprehensive overview on the specifics of these measures is addressed in a previous McMillan bulletin titled: " The Long and Winding Road – Canada-Korea Free Trade Agreement Signed".

This bulletin focuses on the prospects that the CKFTA may hold for Alberta's natural gas industry.


The Canadian natural resource sectors can benefit from the CKFTA. South Korea relies on imported liquefied natural gas (LNG) for most of its natural gas and is the world's second largest LNG importer,5 accounting for roughly 17% of South Korea's total primary energy consumption by fuel type.6 Canada currently does not export LNG to South Korea because it does not have any operational LNG export facilities.7 However, there are six such facilities proposed, five of which are located in British Columbia.8 Under the CKFTA, the current 3% duty on LNG will be removed, which will give Canadian exporters duty-free access on their products to South Korea.9

Alberta's natural gas sector can benefit from the tariff-free access to the South Korean market. In 2012, Alberta exported approximately $95 billion in goods worldwide. Alberta's energy sector accounted for 73% of that total. The United States accounted for 99% of Alberta's crude oil and natural gas exports. The Alberta government is concerned that the growth in the United States' domestic energy supply may result in diminishing demand for Alberta's oil and gas.10 This is a legitimate concern given that in 2012 the prices for Alberta energy products to the United States were comparatively less than those same products exported to other parts of the world.11 It is projected that this trend will continue as the United States intensifies its domestic energy production, which includes unconventional shale gas extraction.12

The CKFTA provides an opportunity for Alberta to curtail diminishing demand and revenues for Alberta's natural gas by strengthening Alberta's economic relationships in the Asia-Pacific region. The following supports this submission:

  1. South Korea is already Alberta's fifth largest export market and an important source of trade and investment.13 South Korea has a strong demand for LNG and the elimination on duties will increase the competitiveness of Alberta's natural gas producers. However, such gains are partially contingent on the completion of the eight to 11 projects planned for export of LNG to Asia.14
  2. The CKFTA will give Alberta a gateway into Asian markets. Dave Collyer, President of the Canadian Association of Petroleum Producers (CAPP) stated that "demand for Canadian products like crude oil and natural gas is strong in Asia and growing...[d]iversifying markets for Canadian oil and natural gas products is vital to ensuring Canada continues to grow its oil and gas production and receives full value for its natural resources."15 The CKFTA will help incentivize the Canadian government to pursue similar agreements throughout Asia, including China, which over the next 25 years is projected to account for more than 30% of the projected growth in global energy demand.16
  3. The CKFTA will create foreign direct investment opportunities for Alberta's energy sector. South Korean companies are already pursuing investment opportunities in Canada's energy sector. For example, in December 2010, Korea Gas Corporation's (KOGAS) subsidiary KOGAS Canada Ltd. acquired a 20% interest in an energy project spearheaded by MGM Energy Corp. for $30 million. Moreover, in August 2010, Korea-based STX Energy Co. bought natural gas fields in British Columbia for $152 million.17 These investments highlight South Korea's appetite for investing in Canada's energy resources.

The CKFTA's investment chapter will facilitate this upward trend in South Korean investment by establishing transparent and predictable rules for bilateral investment, which will create a more stable and secure investment environment. The CKFTA also includes investment rules requiring South Korean businesses to be treated no less favourably in Canada than Canadian ones.18 Moreover, the CKFTA provides the following safeguards: (1) protection from expropriation without prompt and adequate compensation; (2) protection against discriminatory treatment; and (3) access to independent international investor-state dispute settlement, all of which together will strengthen Alberta's already established reputation for being a safe and secure region to invest.19

Concluding Remarks

It is without question that the CKFTA has the potential to redefine Canada's relationship with South Korea and by extension the Asia-Pacific region. Properly carried out, the CKFTA will bring about new economic opportunities for Alberta's energy sector. As with all agreements of this scale, the changing landscape will prompt new legal challenges, which will need to be addressed to avoid unintended consequences while upholding the objectives of the CKFTA.


1 Canada-Korea Free Trade Agreement: Creating Jobs and Opportunities for Canadians Final Agreement Summary, (2014) online: Foreign Affairs, Trade and Development Canada [CKFTA Summary].

2 Lee Richardson, Study of the Canada-Korea Free Trade Negotiations: Report of the Standing Committee on International Trade (March 2008, 39th Parliament, 2nd Session) [Canada-Korea Free Trade Negotiations].

3 Ibid.

4 CKFTA Summary, supra note 1.

5 South Korea-Alberta Relations, (2012). [Korea/Alberta Relations].

6 South Korea is a major energy importer, (January 17, 2013) online: U.S. Energy Information Administration [South Korea Major Importer].

7 Canadian LNG Projects, (November 15, 2013) online: Natural Resources Canada [Canadian LNG].

8 Ibid.

9 CKFTA Summary, supra note 1.

10 Alberta's International Strategy 2013: Building Markets, (2013) online: Alberta Government [Alberta 2013].

11 Ibid.

12 Ibid.

13 Korea/Alberta Relations, supra note 5.

14 Toh Han Shih, "Canadian Exports of LNG to Asia seen as Enormous Opportunity", (January 23, 2014) online: [Canadian Exports of LNG].

15 Travis Davies, Oil and Gas Industry Encourages Canada-Asia Free Trade Talks, (March 25, 2012) online: Canadian Association of Petroleum Procedures [Oil and Gas Industry].

16 Ibid.

17 Korea/Alberta Relations, supra note 5.

18 CKFTA Summary, supra note 1.

19 Ibid.

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2014

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.