Canada's trade minister, itching for a free trade pact with a wary European Union, said on Thursday the EU should want to deepen its trade relations with Canada for its oil.

"Canada's an energy power," Trade Minister David Emerson told a conference on the prospects of closer economic ties between Canada and the EU.

And Canada's development of huge oil and gas reserves in the coming decades, particularly in the Arctic, "is a very, very powerful reason why partners like the EU should want to deepen their relationship with Canada," he said.

"I think if the European Union is visionary, they'll realize that Canada could be one of the most critical, strategic trade moves that they make in the next few decades."

Canada and the EU are currently studying removing barriers to improve bilateral trade, currently at 110 billion dollars annually, but the EU has not shown much interest in a full free trade pact with Canada.

At an estimated 173 billion barrels, the oil sands in western Canada are the second largest oil reserve in the world behind Saudi Arabia, but they have been neglected, except by local companies, because of high extraction costs.

Since 2000, skyrocketing crude oil prices and improved extraction methods have made exploitation more economical, and have lured several multinational oil companies to mine the sands.

The Arctic, meanwhile, is believed to hold the world's largest remaining undiscovered oil and gas fields, and the receding ice cap due to global warming is said to be opening up the region to greater development.