As global energy dynamics shift, Canada is setting its sights on bolstering energy exports to India, a nation grappling with a burgeoning population and soaring economic growth. Energy Minister Tim Hodgson made a compelling case for this strategy at the India Energy Week conference in Goa, highlighting the need for Canada to diversify its energy clientele and reduce its overwhelming reliance on the United States. Currently, a staggering 98 per cent of Canadian energy exports head south of the border, a scenario Hodgson deems a “strategic blunder”.
A New Energy Frontier
At the conference, Hodgson articulated a vision for a future where Canadian energy plays a significant role in meeting India’s formidable energy needs. “The fastest-growing demand for energy in the world will be in India,” he asserted, underscoring the potential for a new trade relationship that could benefit both countries.
Susan Bell, senior vice-president of commodity markets at Rystad Energy, echoed this sentiment, suggesting that tapping into the Indian market is a venture worth pursuing. India boasts a substantial refining capacity, processing approximately six million barrels of crude oil daily, and aims to expand its petrochemical sector. Bell noted, “It’s not just an opportunity for crude oil; it could also be an opportunity for naphtha and potentially even ethane.”
Current Dynamics and Future Potential
While Canada currently exports around 150,000 barrels of crude oil to India—merely a fraction of its overall export market—the potential for growth is significant. The majority of India’s heavy crude imports come from Iraq, and analysts believe that Canadian crude could fill this gap. Rory Johnston, an oil analyst with Commodity Context, indicated that Canadian oil typically reaches India via the U.S. Gulf Coast, with shipping volumes approximating one Very Large Crude Carrier (VLCC) per month. A new pipeline to a deepwater port capable of accommodating VLCCs could facilitate a more direct route, enhancing accessibility for Canadian exports.
India’s oil demand trajectory is particularly noteworthy. Although growth was slower than anticipated in 2025, with an increase of around 100,000 barrels per day instead of the expected 300,000, Johnston believes that demand will gain momentum in 2026. “India is absolutely a strategic market to target,” he stated, given its increasing energy requirements.
Broadening the Energy Portfolio
Beyond crude oil, there are other promising avenues for trade. Bell pointed to liquefied natural gas (LNG) as a potential export product, noting that India currently imports about 5 per cent of the global LNG supply. While China remains a larger player in this market, India’s demand is substantial, offering Canada another significant opportunity for participation.
India’s economy has maintained an impressive annual growth rate of 5.8 per cent since 2016, according to Stuart Bergman, chief economist at Export Development Canada. Despite having made strides in industrialisation, opportunities for further development remain vast. Bell remarked, “I think it’s a smart market to target.”
Strengthening Bilateral Relations
Statistics from the federal government reveal that India ranks as Canada’s seventh-largest partner in terms of goods and services trade, with mineral fuels and oils accounting for approximately $767 million, or 14.5 per cent of total merchandise exports. Dinesh Patnaik, India’s High Commissioner to Canada, highlighted the potential for enhanced trade collaboration, particularly in energy, fertilizers, nuclear technology, and critical minerals. “We want to tie up with everybody possible—especially countries like Canada—to be able to work out deals together,” he stated.
Why it Matters
The potential for Canada to diversify its energy exports to India is significant not only for economic reasons but also for global energy security. As India emerges as a key player in the global energy landscape, establishing a robust trade relationship could lead to mutual benefits, enhancing Canada’s position in the international market while supporting India’s energy needs. This shift could reshape the dynamics of energy trade, paving the way for a more balanced and sustainable global energy future.
