Three Indian companies state-owned Indian Oil Corporation and ONGC Videsh (OVL) and Hiranandani Group from the private sector have firmed up plans for their Canadian forays, seeking a play across the value chain ranging from crude oil sourcing, acquiring upstream assets and setting up LNG and crude oil terminals.
While ONGC Videsh has set up an office in Calgary to scout for oil sand assets, Hiranandani Group subsidiary H-Energy is investing $4.4 billion to set up LNG and crude oil export terminals. IOC will, for the first time, will source crude oil from Canada.
Sources said OVL is seeking oil sand assets mainly in the Alberta province of Canada, including an investment proposal of $ 5 billion in assets owned by oil major ConocoPhilips. The crude contained in oil sands is also called tar sand and is a heavy and viscous form of hydrocarbon. We are currently looking for joint venture partners for buying oil sand assets in Canada. Canada is a good investment destination as it is investor-friendly and has a stable economic and political climate, said the official. Light oil that is low in sulphur is, however, more valuable to refiners than heavy oil with higher sulphur content). As a result crude oil from oil sands trades lower than other oil benchmarks.
IOC will for the first time source crude oil from Canada which will be delivered later in the next 35 days.
We will be buying a spot cargo of 1 million barrels which we hope to ramp up subsequently. This is conventional crude oil, not oil sands, which will be linked to the Brent crude prices, said an IOC official.
IOC officials said that the company is currently sourcing oil from the east coast of Canada which has closest proximity to India. It hopes that infrastructure facilities including pipelines from the west are soon connected to the east coast so as to access a larger share of Canadas hydrocarbon resources. IOC is also looking to acquire upstream assets in Canada.
H-Energy, on the other hand, has acquired 600 acres of land in Nova Scotia to set up two separate LNG and crude oil terminals. We will invest about $ 4 bn to set up the LNG terminal and about $400 million for crude oil terminal. The crude oil terminal should be ready in 2018 and the LNG terminal in 2020, said Darshan Hiranandani, MD, Hiranandani Group of Companies.
Analysts say the US shale boom has forced Canadian oil producers to expand exports beyond traditional markets to fast the fast growing Asia-Pacific region. Government officials from the province of Alberta present at the Petrotech 2014 conference said that they have led a huge delegation to India as they are quite keen on attracting Indian investments. The province offers benefits like a low tax burden as well as boasts of having the fastest growing economy in the country.