Indian Oil to Boost Canadian Investments as India-Canada Ties Strengthen
India's largest refiner, Indian Oil Corporation (IOC), is set to significantly expand its operations in Canada as diplomatic relations between New Delhi and Ottawa experience a notable revival. This strategic move comes amid efforts by both nations to reset their bilateral ties following a period of strain.
Expanding Canadian Footprint
Arvinder Singh Sahney, chairman and managing director of Indian Oil Corp, revealed in an exclusive interview that the company plans to intensify exploration and production activities through its Canadian subsidiary, IndOil Montney Ltd. The corporation aims to become one of the major Indian companies operating in Canada, with plans to work across multiple energy sectors.
"We will be moving ahead with several areas of cooperation with Canada," Sahney stated. "This may include sourcing crude oil, procuring liquefied natural gas (LNG), and expanding exploration activities. We typically collaborate with local partners globally for exploration projects, and we can certainly enhance our efforts in Canada."
Diplomatic Reset Creates Opportunities
The renewed push for energy cooperation coincides with a strategic reset in India-Canada relations following leadership changes in Ottawa. The recent assumption of office by Prime Minister Mark Carney has created fresh momentum for bilateral engagement, overcoming previous tensions related to pro-Khalistan elements based in Canada.
Both countries have recently launched a renewed Ministerial Energy Dialogue, emphasizing the critical importance of energy security and supply diversity for their economic vitality. This development marks a significant turnaround from October 2024, when both nations expelled each other's diplomats and India recalled its high commissioner from Canada.
Canada's Energy Significance
Canada represents a strategically important energy partner for India, which imports approximately 90% of its crude oil requirements. As the world's third-largest oil buyer, India spent $161 billion on oil imports last fiscal year, accounting for roughly one-quarter of the country's total import bill.
Canada stands as the world's fourth-largest oil producer, with production exceeding 5 million barrels per day as of 2024. The country also possesses the fourth-largest proven oil reserves globally, totaling 163 billion barrels, with 159 billion barrels located in oil sands formations.
Investment Plans and Existing Assets
When questioned about additional investments in IndOil Montney Ltd, Sahney confirmed, "Yes, we will proceed as projects materialize. We intend to increase our subsidiary's engagement in Canada."
Indian Oil's Canadian involvement dates back to 2014 when the company, through IndOil Montney Ltd, acquired a 10% stake in shale gas assets along with the proposed Pacific NorthWest LNG export facility in British Columbia. This $1.1 billion transaction with Malaysia's Petronas marked Indian Oil's entry into Canada's energy sector.
According to Indian Oil's FY25 annual report, the company's Canadian assets currently include:
- Proved developed reserves of 1,670.73 thousand metric tonnes of crude oil
- 14,922.47 million cubic metres of natural gas reserves
The company reported upstream production of 4.45 million metric tonne of oil equivalent (MMtoe) in the last financial year, partially attributed to increased production from the Pacific NorthWest LNG project in Canada.
Diversifying Energy Sources
Beyond Canadian expansion, Indian Oil is actively diversifying its crude oil sourcing to navigate volatile global markets and reduce dependence on any single supplier. Sahney emphasized the company's strategy to "procure crude from as vast a basket as possible" and process it in the most cost-effective manner.
India currently imports oil from approximately 41 countries and is exploring new suppliers following sanctions on Russian companies Rosneft and LUKOIL in November. The diversification strategy includes looking beyond traditional suppliers to emerging sources.
"Brazil is emerging as a significant supplier, along with Colombia and Guyana," Sahney noted. "These sources weren't as prominent three years ago, but they've now opened up for us. We're also exploring smaller producing countries that we previously overlooked, as part of our diversification efforts."
Recent data from ship-tracking firm Kpler indicates growing imports from these new sources:
- Brazil: 239,000 barrels per day (first 20 days of January)
- Colombia: 98,000 barrels per day
- Guyana: 210,000 barrels per day
Growing Energy Demand
India's energy imports are projected to increase substantially as petroleum product consumption reaches a record 252.9 million metric tonnes in FY26. This represents a 4.65% increase from the 241.8 million tonnes consumed in FY25, according to the Petroleum Planning & Analysis Cell.
Indian Oil, which accounts for approximately 31% of India's total refining capacity of 258.1 million tonnes per annum, is strategically positioning itself to meet this growing demand through diversified sourcing and international partnerships.
The company's renewed focus on Canada, combined with its broader diversification strategy, reflects a comprehensive approach to ensuring energy security while capitalizing on improving diplomatic relations with key energy-producing nations.
