In a pivotal move to redefine their energy partnerships, Canada and India have committed to bolstering oil and gas trade, a decision announced during India Energy Week in Goa. This initiative aims to recalibrate their economic and geopolitical ties, particularly in light of Canada’s previous overdependence on the United States as an export market. The announcement marks the revival of a ministerial dialogue that had been stalled due to diplomatic tensions, signalling a renewed focus on mutual energy cooperation.
New Commitments in Energy Supply
During discussions between Canada’s Energy and Natural Resources Minister Tim Hodgson and India’s Petroleum and Natural Gas Minister Hardeep Singh Puri, a commitment was made for Canada to increase its exports of crude oil, liquefied natural gas (LNG), and liquefied petroleum gas (LPG) to India. In return, India will enhance its shipments of refined petroleum products to Canada. This agreement comes at a time when Canada is seeking to diversify its energy markets, having previously relied heavily on the U.S. for nearly all its energy exports.
Hodgson emphasised the need for Canada to explore new opportunities, stating, “Canada used to provide 98 per cent of its energy exports to a single country. That was a strategic blunder. We are committed to diversifying. We see the opportunity to work with India.” He highlighted that India’s demand for energy is projected to grow rapidly, making it an essential partner for Canada in the coming decades.
Shifting Energy Landscape
Currently, Canada does not export crude oil or LNG directly to India, which predominantly sources its oil from Russia, Iraq, and Saudi Arabia, with significant LNG imports from Qatar. Recent data indicates that India’s oil imports have increased by an average of 2.5 per cent over the past three years, while LNG shipments have seen a decline of 6.3 per cent as the country shifts back towards oil amid rising gas prices.
The renewed Canadian outreach comes as India looks to diversify its energy supply chains, particularly in light of the ongoing scrutiny surrounding its energy trade with Russia. Hodgson pointed out that Canada is working to make new Asian energy exports feasible, mentioning ongoing developments in pipeline infrastructure.
Broader Cooperation Beyond Fossil Fuels
The discussions between Canada and India also extended to clean energy initiatives, with plans to enhance collaboration in sectors such as hydrogen, biofuels, battery storage, and critical minerals. The joint statement indicated that both nations will work towards facilitating reciprocal investments and exploring the role of artificial intelligence in the energy sector.
Hodgson noted that India’s expansion of nuclear power generation aligns with Canada’s ambitions to increase uranium exports, further solidifying the partnership’s potential in the realm of clean energy.
A Diplomatic Reset
This new energy engagement is part of a larger diplomatic strategy under Prime Minister Mark Carney, who has prioritised diversifying Canada’s export markets in response to rising trade tensions with the U.S. The two leaders recently restarted discussions on a comprehensive economic partnership agreement, with Carney expected to visit India soon.
Historically, trade between Canada and India was valued at $9.7 billion in 2024, with officials from both nations acknowledging significant untapped potential, particularly in the energy sector. Currently, India accounts for only 1 per cent of Canada’s critical minerals exports, underscoring a substantial opportunity for growth.
Why it Matters
The renewed energy partnership between Canada and India represents a strategic shift in a rapidly evolving global landscape. As both nations seek to navigate the complexities of energy security, cost pressures, and geopolitical dynamics, this collaboration could lay the foundation for long-term strategic alliances beyond North America. For Canada, this move is critical in expanding its energy export capabilities and reducing dependence on traditional markets, while India stands to gain a more diversified and stable energy supply, enhancing its own national security and economic resilience.
