The country's efforts to cut down on its ever-increasing oil import bill could get a significant boost as cheaper Canadian crude from its Alberta oil sands bounty will reach Indian shores in large quantities four years from now. Incipient crude production at the land-locked sites are at a very low level now but would be ramped up by 2018 when a pipeline to evacuate the oil to the east coast of the North American country would be ready.
India's Reliance Industries
and Indian Oil Corporation are seen as potential major buyers of Candian crude, which can be 14% cheaper for them than Indian basket of crude (which stood at around $104/barrel late last week) right now and could turn even more lucrative once the pipeline infrastructure is in place.
When augmented, Alberta oil output could reach 1.1 million barrels per day. Compare that with India's current oil imports of 3.86 million barrels per day, and it is clear that even as China and Japan would compete with India for Canadian crude, India can get a sizeable chunk of it, leading to huge savings on oil import bill and oil subsidies.
In 2012-13, India's oil imports grew by 9.22% to $169.25 billion from $154.96 billion in 2011-12. In the current fiscal, crude oil imports are seen rising to about 196 million tonnes from the 184.795 mt it imported in 2012-13, but relatively low prices have been a solace. India imports crude oil primarily from West Asia.
Canadian high commissioner Stewart Beck told FE that Indian refiners including the state-run IOC and RIL have shown interest in the crude oil being extracted from oil sands that currently trades at $20-25 discount to global crude oil prices. What is more, the synthetic oil extracted from oil sands can help refiners develop a wider range of petroleum products.
The price of oil sands crude trades at a discount as Canada has found huge deposits of the hydrocarbon, which is heavy in nature and difficult to transport, and the US has discovered plenty of its own hydrocarbon reserves in recent times.
Beck said that around 99.9% of Canada's energy exports including oil, gas and hydro go to the US. Oil prices bounce around based on demand. So that is the reason why we would like to access more markets other than the US, said Beck.
An oil ministry official explained that it costs $11-12 per barrel