Canada must act sooner than later if it wants to capitalize on India’s growing energy demands before that economic potential is lost to other producers, suggests industry advocate Tim McMillan.
“The urgency is now—we haven’t missed the opportunity, but the opportunity continues to move on,” says the Canadian Association of Petroleum Producers’ president and chief executive officer. “If we aren’t moving with it, we will be missing it.”
India and Canada have much in common: they share many democratic, pluralistic values and similar Westminster-style parliamentary systems of governance. Further, these Commonwealth nations have complementary trade interests, with one of the world’s largest energy consumers potentially benefiting from one of the world’s largest energy producers.
“As a stable, reliable source of proven energy reserves with advanced energy technologies and an interest in ensuring environmentally responsible development of its natural resources, Canada has many positive attributes that draw foreign investors,” says Catherine Leroux, communications officer at Natural Resources Canada.
“India commonly recognizes Canada as a significant supplier of not only oil, but of natural gas, electricity and renewable energy, nuclear energy and other clean energy technologies to support their transition to cleaner energy sources. Furthermore, Canada offers a stable and predictable regulatory regime to foreign investors, the lowest corporate tax costs in the G7, a highly skilled workforce and strong intellectual property protections,” she says.
Why should Canada target its crude resources at India? To answer that question, McMillan employs a hockey analogy: “Look where the puck is going to be; not at where the puck is.”
It is crucial to consider the market potential for western Canadian crude on the subcontinent, he says, because the likely benefits for the energy sector are massive. McMillan notes the International Energy Agency sees India, along with China, as driving global oil demand growth out to 2040.
“Ninety per cent of that growth will be in those two countries. It’s going to equate to about 10 million bbls/d of increased demand,” he says.
Indian demand growth will increase 46 per cent in the next 23 years, he adds. “It’s substantial.”
Unfortunately, according to McMillan, Canada does not have the infrastructure necessary to link these countries in an ideal trading partnership. He says the mindset of government, industry and Canadians must change to recognize and work toward diversified market opportunities in India for Canada’s energy products.
“We need to execute on these major projects in a way that allows Canada to compete with other markets because today other countries are able to move projects forward in a more expedient and cost-effective fashion, and that has been a challenge for us,” McMillan says.
Think of the opportunities
When it comes to viewing their world-class energy resources, Canadians are often very critical of themselves and their oil and gas industry, according to McMillan. Such self-criticism may be part of the Canadian national psyche.
However, he says, while self-criticism may be good for a country that wants to ensure its greenhouse gas targets are on par with global environmental expectations, it is also important for Canadians to recognize where their energy resources can offer solutions to some of the world’s problems.
According to McMillan, Canada’s energy sector exists within a democracy of high-quality regulatory legislations, perhaps the most stringent in the world. He believes Canada can maintain its high standards while addressing energy needs in countries such as India.
“We have to get the basics right,” he says. “There is no complex formula. There is no lofty moon shot here. We just have to do the basics right. We need to have a clear and understandable regulatory process that is efficient and timely.”