A number of Indian companies are in "discussions" to acquire or invest in Alberta's energy companies, the latest sign of growing foreign interest in Canada's vast reserves of oil and gas assets.
Indian Consul General Preeti Saran said deepening interest in Canadian energy assets is coming from both Indian private and public-sector companies, including the Reliance Group and ONGC Videsh Ltd.
"We would definitely be in need of energy and we are aware that Canada has rich resources, of particularly oil sands and oil," Ms. Saran said Thursday, in an interview at the Indian Consulate in Toronto. "Discussions have been initiated. There has been a lot of interest and interaction that has taken place."
Although she is not privy to the details of those talks, Ms. Saran said Indian companies are exploring those possibilities at time when Canada is increasingly considered "an important partner in India's growth story."
Earlier this week, The Globe and Mail reported that private and state-owned companies are exploring potential purchases of the Alberta oil-sands properties owned by ConocoPhillips Co. Among those potential acquirers is a consortium of state-owned oil and gas companies from India including ONGC Videsh Ltd., Indian Oil Corp. Ltd. and Oil India Ltd., according to published reports.
Indian companies, though, are not alone in their growing attraction to Canadian energy assets to fuel long-term economic growth. There has been a wave of foreign interest from companies in a variety of countries including China, Korea, Norway and Europe. Of particular interest are the oil sands in Northern Alberta, which have a history of welcoming offshore investors. According to DBRS Ltd., about 70 per cent the $28-billion of oil sands takeovers since 2007 were made by foreign buyers. Half of the foreign buyers were state-owned companies.
Although deal makers say India has attempted on a number of occasions to acquire Canadian oil and gas assets, it has lost out to other bidders because head office approval of takeover offers is notoriously slow. Ms. Saran was quick to counter that perception, arguing the Indian private sector is "as dynamic as any other private sector in any other part of the world." Moreover, so-called Navratna companies, or high-performing public sector enterprises such as ONGC Videsh, have made significant overseas investments, she said.
"I would imagine that every company goes through its process of examining the pros and cons of any deal. So, if it doesn't work out, it is because it hasn't worked out on both sides in the pros and cons of the deal," she said. "But I would say that it would be factually incorrect to assume, or (have) the perception that it is on account of delays in decision making. That is factually incorrect."
Bilateral relations between Canada and India have blossomed over the last three years, spurred in large part by Prime Minister Stephen Harper's trip to India in 2009. At that time, both countries set a goal of increasing bilateral trade to $15-billion annually by 2015 and are currently negotiating a free trade agreement.
Naval Bajaj, president of the Indo-Canada Chamber of Commerce, said Indian interest in Canadian energy assets is broadening to include potential takeovers, joint ventures or other strategic investments in natural gas assets. He said a recent business delegation from Gujarat, India, had made specific inquiries on that topic. Nonetheless, he conceded that Canada's ongoing ambiguity around foreign takeover rules is a source of frustration with foreign companies.
"I think that is a challenge that the government should try to look into," Mr. Bajaj said. " When you make the policies simple and straight, it helps the other companies throughout the world to invest."
- With files from Jacquie McNish