Good day, ladies and gentlemen, and welcome to Cenovus' 2023 Annual General Meeting. It is my pleasure to turn the floor over to our host, Director of Communications, Mr. Brett Harris.
Thank you, Operator, and good morning, everyone, and welcome to Cenovus' virtual annual meeting of shareholders. This is the fourth year in a row that Cenovus is holding its shareholders' meeting in this virtual format, allowing a broader base of shareholders to participate regardless of location. I'll just take a minute to explain how the meeting will work. Your information screen displays instructions on how to participate in the meeting by voting and submitting questions. Vote and question functionality is available only for registered shareholders and their duly appointed proxy holders. All other guests are in listen-only mode. Also, please note that because today's meeting is being webcast, there is a slight delay between what our speakers are saying in real time and what participants of the meeting will hear. Polling is now open, and voting is displayed on your information screen.
If you've already voted, you do not need to take any further action unless you'd like to change your vote. We will close the polls following the final voting matter. If you are a registered shareholder or duly appointed proxy holder, you may submit your question at any time during the meeting by selecting the messaging icon on the information section of the screen and typing in your question. Please note that questions related to the business of today's shareholder meeting will be addressed during the formal portion of the meeting. To ensure questions regarding voting matters are addressed before we close polls, we may need to return to earlier agenda items. All other questions will be addressed during a Q&A following the formal meeting and some remarks from management. When answering your questions, we may aggregate those that are of a similar nature.
Any questions of a general nature that we do not address at this meeting will be posted to our website, cenovus.com, in the coming days. Now I will ask Keith MacPhail, Chair of Cenovus' board, to call the meeting to order. Mr. MacPhail.
Thank you, Mr. Harris, and welcome to Cenovus' annual meeting of shareholders. Before we begin the formal portion of the meeting, I'd like to just take an opportunity to thank you, our shareholders, for your support and confidence. As you know, I did not stand for reelection, and chairing this meeting is my last act as member and chair of the board. Since I joined Cenovus' board in 2018 and was appointed chair in 2020, we've accomplished a lot, even as we've had to navigate through some challenging times. I know Alex will touch on a few of these accomplishments a little later, but there are two things that I'd like to mention specifically.
Through the Husky transaction and other strategic acquisitions and divestitures, we have transformed Cenovus into a stronger, more resilient, integrated energy company, and today we are well positioned to continue thriving and delivering shareholder value through the months and years ahead. Over the past few years, we've also focused on increasing the experience level and diversity of our board. These additional perspectives and talents further strengthen the board's ability to provide strong governance and oversight for Cenovus. It's been a privilege to work with my fellow directors and with Alex, John, and the rest of the company's outstanding management team. I'm confident Cenovus will remain in good hands going forward. Now, on to the business of the day. In accordance with Cenovus' bylaws, I will chair the meeting.
Natasha Dillon-Penner, our Assistant Corporate Secretary, will act as Secretary, and Steven Bandola from Computershare Investor Services will act as Scrutineer. The record date for determining shareholders entitled to receive notice of and vote at this meeting was fixed at March 1, 2023. I have been advised by the Secretary that notice of this meeting was properly given and a quorum is present. Accordingly, I declare the meeting properly called and constituted for the action of business. The reading of the notice of meeting will be dispensed with, and I direct the Secretary to include with the minutes a copy of the meeting materials, confirmation of mailing to shareholders, and the report on attendance. I now call the meeting to order.
Alex Pourbaix, our President and Chief Executive Officer, is on the line today along with Jon McKenzie, our Chief Operating Officer, Jeff Hart, our Chief Financial Officer, Rhona DelFrari, our Chief Sustainability Officer and Executive Vice President, Stakeholder Engagement, and Kam Sandhar, our Executive Vice President, Strategy and Corporate Development. They are all available to answer your questions following the formal portion of the meeting. Also with us today and available to answer any questions is Ryan McKay, Assurance Partner with PwC, our Auditor. The rest of the Cenovus leadership team and our board members are joining us virtually but are in listen mode only. The business of today's meeting is described in the notice of meeting and management information circular dated March 1, 2023, that was delivered and filed in advance of this meeting.
A link to the circular and annual report is available on the document icon on the information section of your screen and can also be found on Cenovus' website. The business of today's meeting is to receive the audited financial statements for the year ended December 31, 2022, and to consider and vote on four items as set forth on pages 12 to 15 of the circular: appointment of our Auditor, the election of Directors, the non-binding advisory vote on the corporation's approach to executive compensation, and a shareholder proposal. For efficiency, we have prearranged for Jon McKenzie, Jeff Hart, Rhona DelFrari, and Kam Sandhar, all Cenovus shareholders, to move and second the formal business motions. We will now proceed with the formal business of the meeting. The first item of business is to receive the consolidated financial statements and the Auditor's report for the year ended December 31, 2022.
The 2022 annual report containing these audited financial statements was delivered to shareholders in advance of the meeting, and a link can be found on the information section of your screen as well as on cenovus.com. We will now move on to the voting items. The polls are still open for voting on the items of business. As mentioned earlier, voting will be conducted online, polling, and your voting options will be visible on your screen if you are a registered shareholder or a duly appointed proxy holder. If you have already voted, you do not need to take any further action unless you would like to change your vote. Item one on the agenda is the appointment of our Auditors as set forth on page 12 of the circular. Could I have a motion?
Mr. Chair, my name is Jon McKenzie, and I move for a vote on item one to appoint our Auditor as set forth on page 12 of the circular.
Thank you, Mr. McKenzie. Is there a seconder for the motion?
Mr. Chair, my name is Rhona DelFrari, and I second the motion.
Thank you, Ms. DelFrari. Are there any questions on the motion?
Mr. Chair, we have one question on the motion from Alan Abrams. Why are Canning K. L. Fowler, one-third votes withheld, and Frank W. Sixt, one-fourth votes withheld, still being nominated to the board?
They represent our major shareholder. They are highly contributing directors who bring a broad experience to the board and are very helpful in helping us conduct our business.
Mr. Chair, we have no further questions at this time.
Okay. We will now move on to item number two on the agenda. The election of each of the director nominees is set forth on pages 12 and 13 of the circular, being Keith Casey, Canning K. L. Fowler, Jane E. Kinney, Errol M. McCormack, Eva H. Kwok, Melanie A. Little, Richard Marcogliese, Jon McKenzie, Claude M. Monjo, Alex Pourbaix, Wayne K. Shaw, Frank W. Sixt, and Rhonda Zimnoch. There have been no further nominations received in advance of the meeting. In accordance with Cenovus' bylaw number one, I declare the nominations closed. Could I have a motion?
Mr. Chair, my name is Jeff Hart, and I nominate each of the individuals you have listed and as set forth on pages 12 and 13 of the circular, and I move that each nominee be elected a director of Cenovus.
Thank you, Mr. Hart. Is there a seconder for the motion?
Mr. Chair, my name is Kam Sandhar, and I second the motion.
Thank you, Mr. Sandhar. Are there any questions on the motion?
Mr. Chair, there are no questions on the motion.
We will now move on to item three, a non-binding advisory resolution to approve the corporation's approach to executive compensation. Could I have a motion?
Mr. Chair, my name is Rhona DelFrari, and I move for a vote on item three, a non-binding advisory resolution to approve the corporation's approach to executive compensation as set forth on page 13 of the circular.
Thank you, Ms. DelFrari. Is there a seconder for the motion?
Mr. Chair, my name is Jeff Hart, and I second the motion.
Thank you, Mr. Hart. Are there any questions on the motion?
Mr. Chair, there are no questions on the motion.
Okay. We will move on to the final item of business, a shareholder proposal submitted for consideration by Salal Foundation and represented by Investors for Paris Compliance. A full text of the shareholder resolution is set forth on page 14 of the circular. Investors for Paris Compliance's supporting statement is set out in full in schedule C of the circular. As described on pages 14 and 15 of the circular, the board and management recommend that shareholders vote in favor of the proposal. I now invite Duncan Kenyon of Investors for Paris Compliance to make the motion and present the proposal on behalf of Salal Foundation. Operator, please add Mr. Kenyon to the line.
Mr. Kenyon, your line is open, sir.
Great. Thank you very much. Hello. Thank you, Mr. Chair.
Please go ahead.
All right. My name is Duncan Kenyon, and I am the duly appointed proxy holder for the Salal Foundation. I move that shareholders request that the board produce a report at a reasonable cost and omitting proprietary information, outlining whether and how Cenovus is aligning its direct and indirect lobbying and public policy advocacy with its net-zero goal. The report should be repeated periodically and disclose any evaluation criteria on external stakeholders consulted, if any.
Thank you very much, Mr. Kenyon. We appreciate your engagement on this matter. Is there a seconder for the motion?
Mr. Chair, my name is Rhona DelFrari, and I second the motion.
Thank you, Ms. DelFrari. I'd like to remind you that the board and management recommend voting in favor of the shareholder proposed resolution for the reasons outlined on pages 14 and 15 of the circular. Are there any questions on the motion?
Mr. Chair, there are no questions on the motion.
Okay. Mr. Kenyon, would you like to present anything else on this motion?
Yeah. Thank you, Mr. Chair. I had a little bit of something I'd like to say regarding the proposal. First of all, thank you and good morning to all of you on the call. I lead Investors for Paris' engagement here with the oil and gas sector, and it was a really good engagement with Cenovus on this resolution. I'd like to say the credit to Cenovus that they are recommending voting for this resolution. It's encouraging to see that Cenovus is committing to improving its climate lobbying and understands that there's a changing landscape here with regard to disclosure, climate action, and ESG. These are really good steps by Cenovus, and it's starting the process here, making the linkage between net-zero climate action and lobbying.
One thing I'd like to add in this context, and I think it's sort of room for further discussions with Cenovus and investors, I have to sort of make a decision here or make a decision around how climate lobbying is going to reflect Cenovus' understanding of the changing economic and geopolitical forces that are sort of at play from a big global energy transition that is occurring, right? This energy transition has really accelerated in the last year, in part in response to the insecurity and price shocks and supply challenges caused by the Ukrainian war, but also in part by some of the big geopolitical and global economic changes that are being played out in the global landscape, right?
You have big changes in the energy transition from key markets like the EU and China and India and the U.S. who are making big accelerated investments to better position themselves to compete in a new global economy, to maintain their geopolitical influence and position, and really have a strong position in an emerging new energy space. That only really accelerates what is a medium and long-term trend where net-zero means a significant drop in demand for both oil and gas. The bottom line here is that there is this movement by key global players accelerating clean energy technologies and markets, and there is a new trifecta being created here of cheaper and more secure and cleaner energy alternatives to oil and gas.
Many of you will probably be asking, "What the heck does this have to do here with a lobbying resolution and Cenovus' support for it?" I think the crux of it here is I think Cenovus really needs to put in place a lot to understand how its climate lobbying needs to reflect opening doors so they can be more competitive in this new emerging space. I've been working on CCS and carbon capture and utilization storage for 15 years. My feeling here is at this point that that technological solution is not going to move the bar far enough. My hope is that Cenovus can really expand its lobbying such that it can open more doors for more value to be created and new economic opportunities and new revenue streams.
I think they've put in Cenovus has really put in place the right foundation for building the transparency and accountability for its lobbying. We really do look forward to having further discussions about how the company can use its lobbying position to open up new doors and create new revenue streams and respond to the competitive threats in the energy transition. Thank you.
Okay. Thank you again, Mr. Kenyon, for your comments. Are there any further questions on this matter, Operator?
Mr. Chair, we have no further questions.
Okay. Thank you. We will wait now to allow those voting online to do so. Majority of the votes cast by shareholders who voted online or by proxy at this meeting must be received. I have received the scrutineer's report and confirm as follows. Item number one, PricewaterhouseCoopers LLP is appointed as auditor of Cenovus. Item two, each director nominee is elected to the board. Item three, the non-binding advisory vote to accept the approach to executive compensation was approved by 98% of the votes cast by shareholders. Item four, the shareholder proposed resolution was approved by 99% of the votes cast by shareholders. I direct the secretary to file the final scrutineer's report with the minutes of the meeting. Details of the voting results will be filed with securities regulators and included in our news release following the meeting.
The formal business of the meeting is now complete. May I have a motion to conclude the meeting?
Mr. Chair, I move that this meeting conclude.
Thank you, Mr. McKenzie. I declare the formal business of the meeting is concluded. I now invite Mr. Alex Pourbaix to give his remarks followed by a question-and-answer session. Alex?
Thanks, Keith. On behalf of Cenovus and our shareholders, I'd like to recognize the extensive business and energy sector expertise you've brought to our board over the past five years, including the last three as Chair. Keith has helped Cenovus navigate through a period of significant transformation, and the company wouldn't be where it is without him. Enjoy your retirement, Keith. Before I begin, please note the advisory on your screen, which refers to some of the information I'm about to discuss. Additional information about our forward-looking statements and financial information can be found in our first-quarter news release, first-quarter management's discussion and analysis, and our 2022 annual report. These are all available on cenovus.com under Investors. In a moment, I'll review our successful performance in 2022 as well as provide an overview of our Q1 results. First, I want to talk about safety, which is our top priority.
In 2022, we continue to improve our safety performance across the company compared with the year before. There are a couple of areas that I'd like to highlight. Our well delivery group reduced its recordable injury frequency from 0.91 in the first quarter of 2022 to 0.53 by the end of the year. At the Lima refinery, that same rate dropped to 0.1 from 0.5 the year before. While we recognize these efforts, we never take our safety performance for granted. Incidents at our non-operated refineries in 2022 reinforced how important this is for all of us. We will not become complacent. We remain focused on ensuring Cenovus' strong safety culture is embedded at every site we operate. Now to our results. I'll begin with our first-quarter performance, the details of which are available at cenovus.com.
This morning, we announced an increase to our base dividend of 33% for CAD 0.56 per share annually. This increase is effective starting in the second quarter. We experienced some challenges in the quarter, and we are addressing them. Our upstream results were impacted by lower commodity prices, and production was slightly lower than expected due to a number of factors, including the timing of new sustaining well pads being brought on at Christina Lake to offset declines. Foster Creek and Christina Lake each have three additional well pads coming on in the second half of the year, which will contribute to production volumes. In the downstream, while the Lima refinery and Lloydminster upgrader are refinery operated well, turnarounds at our partner-operated Wood River and Borger refineries impacted throughput. Our Superior and Toledo refineries largely remained in startup mode for most of the quarter.
However, I'm happy to say construction at Superior is complete, and we began running crude in mid-March. At Toledo, we've wrapped up construction of the impacted zone. At both refineries, we are now making on-spec product, and we expect them to ramp up to full rates through the second quarter. We expect these two assets to generate significantly improved operating margins through the quarter, approaching break-even in June, and achieving free cash flow by July. While our overall US manufacturing business hasn't performed to our expectations so far this year, we've been actively taking steps to improve performance, and we expect meaningfully better results through the rest of 2023. To reflect the impact of these challenges in the first quarter, we've adjusted our full-year guidance for production and throughput. Lastly, you'll see that our net debt increased to CAD 6.6 billion at the end of the first quarter.
This was expected due to a number of factors, primarily a large cash payment for our 2022 taxes and some costs related to the Toledo and Sunrise acquisitions. Notwithstanding these impacts in the first quarter, assuming commodity prices remain around current levels, we expect net debt to fall below CAD 4 billion in the fourth quarter. While the first quarter did present us with some financial and operational challenges, I can assure you that Cenovus remains extremely well-positioned to provide meaningful and sustainable returns in the months and years ahead. Today's increase in our base dividend underscores our confidence in the long-term success of our company. Now I'd like to walk you through our 2022 performance, which I believe provides a great example of Cenovus' underlying value and our long-term potential. As you'll recall, a year ago, we announced our new capital allocation framework for delivering enhanced shareholder returns.
This framework is based on our net debt level, which we reduced by half over the course of 2022. As a result, this enabled us to deliver CAD 3.4 billion to shareholders in 2022 through three mechanisms: our base dividend, which we tripled in the second quarter of last year and increased again this morning; opportunistic share buybacks. In November, we renewed our share buyback program with the ability to purchase up to another 137 million common shares; and in Q3, a variable dividend, the first paid under this plan. This framework reinforces our continued balance sheet strength and our commitment to returning cash to shareholders. In 2022, we also reduced our total debt by CAD 3.7 billion.
In December, DBRS and Fitch both upgraded our credit rating, citing the significant reduction of total debt, our success in integrating the legacy Husky assets, Cenovus' integrated operating model, and the company's commitment to financial discipline. Overall, in 2022, Cenovus' total shareholder returns outperformed both the S&P, TSX Composite, and energy indices. In 2022, we also delivered strong financial results. We generated adjusted funds flow of CAD 11 billion, 51% higher than the year before, and free funds flow of CAD 7.3 billion. Our full-year net earnings were about CAD 6.5 billion compared to CAD 587 million in 2021. Turning to our operations, last year, we continued to right-size our overall portfolio, acquiring the half of the Sunrise Oil Sands asset that we did not already own. We also announced an agreement to fully own and operate the Toledo refinery, which closed at the end of February.
The sale of our retail network was finalized, along with the Tucker thermal asset and some conventional assets. We made the decision to proceed with a West White Rose project in Atlantic Canada. Last month, we resumed work on the concrete gravity structure and expect first oil in early 2026. Offshore Indonesia, we achieved first oil at our MBH and MDA fields. The Asia-Pacific assets continue to deliver good value at contracted pricing. We continue to apply the Cenovus operating model to legacy Husky SAGD assets and are seeing the results. We exited the year with more than 800,000 barrels per day of production. On the sustainability front, we continue making progress on our environmental, social, and governance targets. One area I'd like to highlight is our indigenous reconciliation target.
We plan to spend at least CAD 1.2 billion with Indigenous businesses by the end of 2025, helping to build economic self-sufficiency in these communities. We were about two-thirds of the way there at the end of 2022, and even after reaching our target, we will continue looking for additional opportunities to work with Indigenous vendors. We are also advancing our emissions reduction strategy. This includes the CAD 1 billion embedded in our five-year plan for carbon capture and storage and methane reduction, among other technologies. Our potential carbon capture projects include those at the Minnesota ethanol plant, Lloydminster upgrader, Elmworth gas plant, and Christina Lake. Almost two years into our journey with Pathways Alliance, we reached an important milestone at the end of last year.
We've entered into an agreement with the government of Canada that allows us to begin a detailed evaluation of the proposed underground storage hub for the carbon we'll capture. This is needed for the ongoing regulatory process. A lot of necessary pre-construction work is also underway with Cenovus and our Pathways peers, including feasibility studies, early engineering work on the carbon capture projects and CO2 transportation line, as well as advancing other technologies. A lot of my time over the last couple of years has been involved talking to governments about the financial and policy supports we need to ensure our industry and company can remain competitive as we decarbonize so that Canada can be an oil and gas sustainability leader. These discussions continue to be productive. This is important work I'll continue in my new role as Jon runs the company.
Looking ahead to the rest of the year, the continued geopolitical instability we're seeing demonstrates the ongoing need for global energy security. Cenovus and the Canadian industry are well-positioned to deliver the reliable, sustainable energy the world needs. In 2023, Cenovus will be focusing on two main areas: safely ramping up our operations at Superior and Toledo refineries and getting our net debt below CAD 4 billion. Once our downstream segment is running as well as we know it can, it's going to generate significant long-term value for shareholders. While a number of factors impact our net debt, and assuming commodity prices remain around current levels, we expect to fall below the CAD 4 billion floor in the fourth quarter of this year. As the year progresses, we're set up for improved production and a fully operating downstream business.
This will allow us to demonstrate the full capability of our integrated business. This is my final annual shareholders meeting as President and CEO of Cenovus, although I will be there next year as Executive Chair of the board. These five and a half years have been the best of my career. We've remade Cenovus into a low-cost, resilient, integrated energy company. When I say we, I mean our board, my leadership team, and the dedicated staff who put our decisions into action. We could not do any of it without the support of our shareholders. I do not want to turn this into a greatest hits package, but I do want to mention a few of the things we've accomplished together since 2017. First, the Husky deal transformed this company, contributing to our operational strength. We have delivered above and beyond our targeted synergies for that transaction.
have strengthened the balance sheet, including aggressively reducing debt and implementing our shareholder returns framework. We have evolved our portfolio through acquisitions and divestitures and by applying Cenovus' SAGD techniques to legacy Husky assets. This has better positioned us to maximize our heavy oil value chain. We have returned significant value to our shareholders, even through some incredibly challenging times. Jon McKenzie, our new President and CEO, has been essential to this process and progress. Hiring him as our CFO was one of the very first things I did as CEO. When I started at Cenovus, our shareholders told me the company lacked a strong internal succession plan. That is no longer true. Not only is Jon imminently qualified and ready to step into the CEO role, but I have never worked with as capable a leadership team as we have in place today.
I look forward to continuing to work closely with him in my new role as we continue to drive value for our shareholders. Cenovus is in good hands. In 2023, your executive team will continue to generate meaningful shareholder returns at prices as low as $45 a barrel, maximize our world-class assets, including our leading in-situ oil sands operating model, and our downstream business and full value chain, all while focusing on innovation and safety. Maintain our approach to financial discipline and balance sheet strength as we move towards our net debt floor of $4 billion, and stay focused on our sustainability leadership, being transparent with the progress we're making on our ESG targets. Thank you to everyone for your continued support of Cenovus. I'll now open the floor to questions from registered shareholders and duly appointed proxy holders.
Ladies and gentlemen, we will now answer questions submitted online. If you have a question, please click on the messaging icon on the information section of your screen to type and submit your question. Questions that are similar in nature may be grouped together for a single response. If we run out of time and do not get to your questions, we will post all our questions and answers, including those questions that are not addressed during the meeting, on cenovus.com within five business days. Mr. Chair, we have one question from Jeff Carlson, a shareholder. My name is Jeff Carlson. I'm a shareholder and proxy holder. I'm a retired professional engineer who has built his career in natural gas and oil storage, exploitation, and production.
Oil and gas exploration, production, and refining are all under attack by the misguided and misinformed who mistakenly believe that fossil fuels are, at best, not needed and are, at worst, evil. Not only are oil and gas producers under attack, but so are the financial institutions who lend money to the industry. If oil and gas companies and the public, and by the public, I mean everyone, do not stand up for these necessary energy and raw material resources, our civilization will be irreparably harmed. My question is, what specifically is Cenovus doing to counter these attacks and educate the public and government agencies accordingly?
Thank you, Mr. Carlson. I am going to hand that question off to our CEO, Alex Pourbaix.
Thanks, Keith. Thanks for the excellent question, Jeff.
I'm going to make some comments, and then I may hand it over to Rhona DelFrari to see in case I miss any points that she would like to make. As I said, I think this is an excellent question, and it gets to a really significant issue in society right now. I have been quoted many times suggesting that we are not going to be—we're not in an energy transition. We're actually—what we're involved in is energy diversification. Cenovus is very focused, as I think anyone can see from our materials, from our public statements and our actions, that we are doing everything that we think is prudent and possible to reduce our own emissions. This company has reduced its emissions, for example, on an intensity basis per barrel by over 20% over the last 15 years.
We have also committed, through Pathways, to continue reducing the emissions of the oil sands across the board, ultimately with an aspiration of net zero by 2050. I want to get back to this point about energy diversification. I think very few people know the incredible role that oil and gas play in society globally in keeping people safe, keeping people healthy, fed. Right now, after 40 years of attempted diversification, particularly with renewables, oil and gas and fossil fuels still represent over 80% of the total energy consumed in the world. Renewables represent somewhere around 5%. This is not because people are evil or bad. This is because oil and gas, particularly, have a number of very important attributes that are not shared, particularly by renewables. That is, oil and gas are amazingly abundant around the world.
They are relatively cheap, particularly compared to many other types of non-emitting energy. Oil and gas are very easily, cheaply, and safely stored and delivered to consumers. When used in industrial processes, and this is probably the most important point, they deliver almost 100% reliability and availability. Those are really the reasons why they continue to be so important for the world. My hope and my expectation is, over time, we're going to see more renewables. I suspect we're going to continue to see a very large amount of oil and gas, albeit oil and gas that is decarbonized or the carbon emissions are significantly abated by the technologies that we are talking about at Pathways and in other forums.
I suspect and I hope we're going to see more nuclear power because nuclear is the one energy source in the world that can actually deliver the reliability and predictability of oil and gas. I think that is the issue. We are absolutely committed, as I've said, to decarbonizing our industry. This is a huge undertaking, not just for Cenovus, but for the entire industry. I liken it to a moonshot, and it's going to require the support of our industry, the support of governments to collaborate to put in place the policy and fiscal framework that will allow us to do this while maintaining the competitiveness of our industry.
I think it is also probably not lost on people that of all of the jurisdictions in the world that are material oil and gas producers, no one is proposing—no country is proposing—to move as quickly to decarbonize their energy sector as Canada is. It is incredibly important that we're able to do that while maintaining our competitiveness and maintaining the massive benefits that the oil and gas sector provides to this country. To put it in some numbers, it is estimated that our industry presently employs directly and indirectly approximately 500,000 Canadians in this industry. These are some of the highest-paying jobs in this country, and all of those people pay taxes at all levels of government. On top of that, our industry is a huge part of the Canadian economy.
I estimate in 2023 that this industry will probably represent close to 10% of Canada's GDP and a very, very significant portion of our balance of trade with other countries. This year, it is estimated by a number of banks that our industry is going to pay somewhere in the order of $50 billion in taxes and royalties to all levels of government. I think Canadians—I think hopefully this helps people understand the importance of continuing to produce oil and gas, given that they are such incredibly vital commodities for human prosperity and, frankly, human safety. As to your question, what specifically is Cenovus doing to counter these attacks and educate the public and government? I hope that our shareholders and the people that follow this company will understand that Cenovus has been a huge leader nationally and internationally with respect to advocacy on these issues.
I personally spend a significant amount of my time right now doing advocacy, working with governments, and countering the worst of these attacks. In my new role as Executive Chair, I have retained that responsibility for government relations and advocacy. I will certainly be doing my part. I believe that Pathways has really been a huge part of this. As I said, this is an organization of the six largest oil sands operators that collectively represent about 95% of the heavy oil that's produced in the province. We are all committed to ultimately net zero. The good news, as I said, is our industry is an industry that actually has technologies that are commercial presently and many more that I believe will be commercial in the coming decades that will allow us to achieve that.
I think that's going to be a challenge for industries around this country. That's where we are, and I hope that was helpful.
Thank you, Alex. Well said.
Thank you, Mr. Pourbaix. There are no further questions.
Ladies and gentlemen, on behalf of your board of directors and the leadership team, thank you for attending our annual meeting of shareholders.
Ladies and gentlemen, this does conclude today's meeting, and we thank you for your participation. You may now disconnect your lines.