Canadian 'safe-bet' for IndianOil crude imports

Vol 16, PW 3 (23 Aug 12) People & Policy
     

Canada’s 175bn barrels of proven oil reserves could be India’s answer to reduce dependence on troubled Iran and unstable Middle Eastern nations for its crude imports.

A two-member team from state-owned IndianOil, desperate for alternative supplies, visited Calgary on July 5 to discuss potential crude or LNG import deals with 10 companies, among them Cenovus Energy, Devon Energy, Marathon Oil, Suncor Energy, Husky Energy, Astra Energy and Nexen. “We are examining business opportunities in the Canadian hydrocarbon sector,” confirms IOC.

“India’s increasing oil and gas demand is matched only by growing production in Canada.” Canadian oil, he adds, is much cheaper than what IndianOil buys from the Middle East, even after factoring in higher shipping costs.

Canadian crude, he said, sold at $62 to $83/barrel over the first six months of this year. ‘Synthetic’ crude from oil sands in the country sold at $90 to $95/barrel over the same period, against Brent at $113/barrel.

Encouraging forecasts by the Canadian Association of Petroleum Producers (CAPP) say total Canadian oil production will increase from 3m t/y to 3.8m t/y by 2015 and grow further to 6.2m t/y by 2030. Oil producers are looking to line up international customers on long-term 15 to 20 year contracts.

But there’s a snag: under Indian law state-owned companies can only sign long-term international agreements with national oil companies and Canada has no state-owned oil companies. Stewart Beck, Canada’s high commissioner to Delhi, has a solution.

Last month he suggested an intergovernmental deal between IOC and state-owned Canadian Commercial Corporation (CCC), the country’s export facilitator.