Panaji: Indian Oil Corp. plans to step up exploration and production activity in Canada and explore sourcing crude oil and liquefied natural gas from the country, as India and Canada move to rebuild strained diplomatic ties, chairman and managing director Arvinder Singh Sahney said in an interview.
“We will be one of the major (Indian) companies (in Canada). We'll be moving ahead. We will be working on several areas with Canada. It may be sourcing crude, sourcing of LNG and it may be exploring there. We generally go ahead with a local partner globally for exploration and we can do more exploration there," Sahney told Mint.
The push comes as New Delhi and Ottawa work on a strategic reset following a change in leadership in Canada, with Prime Minister Mark Carney assuming office, and after a period of tensions over pro-Khalistan elements based in Canada. Both countries are also navigating new US tariffs and are seeking to deepen energy partnerships.
Earlier this week, India and Canada launched a renewed Ministerial Energy Dialogue, with both sides stressing the importance of energy security and diversity of supply for the economic vitality of the two countries. Bilateral ties have revived over the past year after both countries expelled each other’s diplomats and India recalled its high commissioner from Canada in October 2024.
Canada is currently not supplying energy to India. However, with India consistently diversifying its energy sourcing basket, efforts to boost energy ties have accelerated. Canada is the world’s fourth-largest oil producer, producing over 5 million barrels per day as of 2024, according to data from the Canadian government. It also holds the world’s fourth-largest proven oil reserves at 163 billion barrels, of which 159 billion barrels are in oil sands.
Asked whether Indian Oil would make further investments in its Canadian subsidiary IndOil Montney Ltd, Sahney said, “Yes…We will go ahead as projects come along. We have an intent of increasing the engagement of our subsidiary in Canada.”
Why Canada matters
The move matters for India, the world’s third-largest oil buyer, which imports nearly 90% of its crude requirement and sourced oil worth $161 billion last fiscal, accounting for about a quarter of the country’s import bill. A $1 per barrel fall in oil prices reduces India’s import bill by about ₹13,000 crore.
India is the world’s fourth-largest refiner with a total capacity of 258.1 million tonnes per annum (mtpa), expected to rise to 309.5 mtpa by 2030. Indian Oil accounts for around 31% of current capacity at 87.5 mtpa.
Indian Oil, the country's largest refiner, reported upstream production of 4.45 million metric tonne of oil equivalent (MMtoe) in the last financial year, up from 4.26 MMtoe in the previous year. In its annual report for FY25, the company attributed part of the increase to higher production from the Pacific NorthWest LNG project in Canada.
IndianOil, through IndOil Montney Ltd, Canada, bought a 10% stake in shale gas assets along with the proposed Pacific NorthWest LNG Ltd export facility in British Columbia and Canada’s west coast from Malaysia’s Petroliam Nasional Bhd (Petronas) in a $1.1 billion transaction in 2014. The company has not made any major investment in Canada’s exploration and production space since that acquisition.
As of FY25, proved developed reserves of IndianOil’s Canadian assets stood at 1,670.73 thousand metric tonnes of crude oil and 14,922.47 million cubic metres of natural gas, according to its annual report.
IndOil Global B.V. is the Netherlands-based investment arm of Indian Oil for exploration and production assets in Canada and the United Arab Emirates, while IndOil Montney Ltd is its step-down subsidiary.
Diversifying beyond Russia
On navigating volatile oil markets amid US tariffs and pressure to lower imports of Russian crude, Sahney said, “We, as a company, want to be commercially right going forward…That is my job of procuring crude from as vast a basket as vast a canvas and process it in the most profitable, the most cost-effective manner and dispense the product to the customer at the least cost.”
India currently imports oil from about 41 countries. Since sanctions on Rosneft and LUKOIL were brought into effect in November, India has been looking to further diversify its import basket. A parliamentary standing committee on petroleum and natural gas last month flagged concerns over India’s high import dependence and urged diversification of crude sourcing.
Sahney said Indian Oil would look at sourcing from smaller oil-producing countries, including in Africa.
“There are several countries which produce very little fuel, maybe one cargo in a month or two cargos in a month. That is a kind of sourcing we are also encouraging now to bring in (more crude),” he said.
Sahney also noted that Brazil, Colombia and Guyana have emerged as new suppliers. Data from ship-tracking firm Kpler showed that in the first 20 days of January, average supplies from Brazil stood at 239,000 barrels per day, Colombia at 98,000 bpd and Guyana at 210,000 bpd.
“Brazil is coming up. Colombia is coming up and Guyana is coming up. These are the factors which were not there like three years earlier. And now we have got these three sources open up. We are also looking at some smaller countries which we were not looking at earlier, but because we want to diversify our sources we are going into those,” he said.
Indian energy imports are set to rise as total petroleum product consumption is projected to reach a record 252.9 million metric tonnes in FY26, a 4.65% increase from 241.8 million tonnes in FY25, according to the Petroleum Planning & Analysis Cell of the petroleum and natural gas ministry.
The reporter is in Panaji at the invitation of the union petroleum and natural gas ministry.