Canada is poised to boost its exports of crude oil and natural gas to India while simultaneously importing refined petroleum products from the South Asian nation, as both countries seek to deepen their trade relationship. This announcement came following discussions between Canadian Energy and Natural Resources Minister Tim Hodgson and Indian Petroleum and Natural Gas Minister Hardeep Singh Puri during Hodgson’s recent visit to India. A joint statement highlighted that energy security and a diversified supply chain are crucial for the economic prosperity of both nations.
A Shift in Energy Trade Dynamics
Currently, a staggering 97 per cent of Canada’s energy exports are directed towards the United States. However, Prime Minister Mark Carney has made it a priority to double non-U.S. energy exports, with India emerging as a key focus area. India stands as the world’s third-largest oil consumer and the fourth-largest importer of liquefied natural gas (LNG), making it an attractive market for Canadian energy.
Canada aims to leverage the Trans Mountain Expansion (TMX) Pipeline to facilitate increased exports of LNG and crude oil to various Asian markets. The joint statement indicated that Canada also plans to enhance its liquefied petroleum gas (LPG) exports to Asia, with India identified as a significant market for these products.
Current Energy Trade Landscape
At present, Canada’s energy trade with India is relatively modest, primarily consisting of bituminous coal and some crude oil exports. In 2024, the total value of energy exports from Canada to India reached $761.5 million, while Canada imported $206 million worth of energy products from India, primarily refined petroleum. The majority of exports consisted of $602 million in coal, alongside $158 million in crude oil and bitumen. In stark contrast, Canadian energy exports to the U.S. totalled a remarkable $171 billion in the same year.
India, for its part, is eager to diversify its energy sources, especially given its heavy reliance on imports. In the 2023-24 period, approximately 88 per cent of India’s crude oil consumption was sourced from abroad, with a significant portion arriving from Russia. However, recent geopolitical tensions have prompted a 17.8 per cent decrease in Russian oil imports, largely attributed to European Union sanctions.
The Potential for Partnership
International Trade Minister Maninder Sidhu underscored the opportunities this presents for Canada at the World Economic Forum in Davos, asserting that India is “destined to be the third-largest economy in the world.” He emphasised that with India projected to require 70 per cent more energy by 2040, Canada’s abundant energy resources could play a vital role in meeting this demand. The ongoing economic growth in India, estimated at around seven per cent annually, further underscores the necessity for energy and food supply.
In June of the previous year, Prime Minister Carney engaged in discussions with Indian Prime Minister Narendra Modi during the G7 summit, where they explored potential partnerships focusing on economic growth, supply chain enhancement, and energy transformation.
Diplomatic Context and Future Prospects
Despite these promising developments, diplomatic relations between Canada and India have faced challenges in recent years. Following allegations linking Indian government agents to the murder of Canadian Sikh activist Hardeep Singh Nijjar, both nations expelled diplomats in a significant diplomatic fallout in late 2023. This incident has cast a shadow over the bilateral relationship, yet recent appointments of high commissioners signal a willingness to mend ties.
Minister Sidhu remarked on the need for Canada to navigate these complexities pragmatically, stating, “We want to see the world as it is, not as we wish it to be.” His comments reflect Canada’s strategy to pursue economic opportunities while safeguarding its interests, despite existing tensions.
Why it Matters
The strengthening of energy ties between Canada and India represents a significant shift in the global energy landscape, particularly as both nations look to secure their energy futures amid evolving geopolitical dynamics. As Canada seeks to diversify its trade relationships and reduce its dependence on the U.S. market, its collaboration with India could unlock substantial economic potential, providing a pathway for increased energy security and mutual growth in an ever-changing world.