India is the world’s third-largest consumer of energy and is reported to be looking to quintuple its energy supply within the next 25 years to meet an 8% energy supply gap. Canada is the world’s sixth-largest producer of oil and gas, with the third-largest proven oil reserves (including oil sands) in the world.
While India and Canada have been exploring increasing investment and trade in the oil and gas sector to meet this gap, progress has been slow, due in part to the costs and issues associated with transporting oil from Canada to India. With proposals for a trans-Canadian pipeline being pursued in earnest, there is renewed hope of Canada becoming a significant supplier of oil and gas to India. A five-year memorandum of understanding (MOU) relating to oil and gas signed by the two countries on 28 October 2013 marks a further step in the strengthening of a mutually beneficial and promising trading relationship between the two nations in the energy sector.
Background and purpose
The stated purpose of the MOU is to “establish a framework for discussions on petroleum and natural gas issues with the view to advance the trade and investment ties between Canada and India, enhance energy security and increase cooperation”.
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Raj Sahni is a partner and chair of the India Business Group and Karma Dolkar is an associate at Bennett Jones LLP, a law firm with offices in Calgary, Toronto, Edmonton, Ottawa, Dubai and Doha, and representative offices in Washington DC and Beijing.
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