Midstream Infrastructure Still The Missing Link
BMI View: The recent announcement that India is considering signing a long-term oil supply contract with Canada is a positive signal. However, given several above-ground problems - including the 2012 change to the investment law and insufficient midstream infrastructure - we remain sceptical that it presages a substantial acceleration in liquids growth. Rather, we maintain our forecast that after 2.9% year-on-year average crude, NGL and other liquids growth, we will see more tempered average expansion of 1.9% y-o-y between 2014 and 2023.
Although Asian interest in Canada's heavy oil sands could drive substantial growth in the North American country's liquids production, a number of above-ground concerns encourage us to maintain a more cautious outlook. Most recently, this issue has been highlighted by Indian Oil Minister M Veerappa Moily, who indicated interest in a long-term oil supply contract with Canada at the 2014 Petrotech Conference - likely as an attempt to diversify India's oil resources to protect against the potential for unstable supplies from the Middle East. This follows from a decision last November wherein state-owned Indian Oil Corp joined private refiners Reliance Industries and Essar Oil in importing oil from the North American country. However, while the uptick in demand is positive sign, we caution that without sufficient midstream infrastructure to move the country's heavy oil sands to the coast, we retain a more tempered outlook on Canadian liquids production.
Asian Investment Could Buoy Growth…Or Not?
|Feeding The Dragon|
|Crude Oil Imports To China By Region, 2009 To Year-To-Date ('000b/d)|