While the approval of the Keystone pipeline is important, it alone is not going the fix the challenges facing Canada’s oil and gas sector, says a CIBC World Markets report.

“Keystone will improve access stateside and put a cap on adverse price differentials for Western Canadian producers,” says Avery Shenfeld, chief economist at CIBC. “But recent developments in the global oil industry—from Venezuela to Iraq, from North Dakota to Mexico, from California to China—suggest that Keystone is just one of several important pieces of the puzzle for Canada’s energy sector.

Read: U.S. Senate says yes to Keystone, no to banks

Rising shale oil prospects stateside, the shift in consumption growth to Asia, and a growing list of oil producing countries open to foreign participation, all pose challenges if Canada is to maximize the value of its resource base, he adds.

The report notes that shale oil has gone from a negligible share of U.S. production five years ago, to almost a third today. At $40-$60 a barrel, the full-cycle costs of U.S. shale oil are well below that of a conventional oil sands mining operation, but above most Middle East production. This oil is also now competing for the same channels used to transport Canadian crude to market.

“Growth in U.S. shale output, coupled with a much softer trajectory for medium term demand growth stateside, put America’s net import requirements on a collision course with Canadian plans to ramp up its output by a further two million barrels a day over the balance of this decade,” says Shenfeld.

As a result, Canada’s traditional advantage from being right next to the world’s largest oil importer is unlikely to last much longer. In fact, it is forecast that China will displace the U.S. as the world’s top importer of oil in 2013. Only a decade ago, the country produced more oil than it consumed.

Read: 2013 predictions from the oilpatch

“The world will still need Canada’s crude, given still ample demand growth ahead for Asia, and we doubt supply-demand conditions will permanently sustain prices below Canadian project break-evens,” says Shenfeld. “But it’s increasingly important that Canada move on one or more of the alternative pipelines to get our product headed Asia’s way. Canada’s own central and eastern oil markets are another option, but longer term demand growth there is also likely to be lackluster.”

The report notes that global competition is also changing the energy sector with countries like Iraq, Mexico and Venezuela now focused on developing production for export.

“Canada was once among only a handful of countries welcoming foreign capital in the oil sector,” says Peter Buchanan, a senior economist at CIBC, in the report. “Just over a decade ago, nearly three-quarters of global oil reserves were effectively off limits to major global players, due to state-run firms, outright prohibitions, security or other considerations.”

He notes that today, there are many places seeking investment to develop and expand production.

Read: How the shale gas boom will impact the economy