India may become a “huge market” for Canadian producers avoiding a North American glut of light oil after a pipeline is built to the Atlantic Coast from Alberta, said Husky Energy Inc. (HSE) Chief Executive Officer Asim Ghosh.
Husky, the Calgary-based company controlled by Hong Kong billionaire Li Ka-Shing, made its first oil shipment to India in the fourth quarter, selling 1 million barrels from its offshore White Rose field to Indian Oil Corp., Ghosh said. Once TransCanada Corp. (TRP)’s Energy East line is built from the oil sands, Canada’s crude may become cheaper than West African supplies, he said.
“The sale to India did open up a potentially very large new market for us,” Ghosh said on a conference call today. “Once Energy East is up, India becomes a cost competitive destination for Canadian crude.”
U.S. crude output has increased 59 percent since September 2009 as new drilling techniques unlock vast supplies from shale formations, forcing Canadian and Mexican producers to seek other markets. Last week, Petroleos Mexicanos disclosed it sold light crude to India for the first time.
“As East Coast refiners increase their consumption of light, sweet crude by rail, their appetite for offshore Canadian crudes is going away, forcing those producers to seek other markets,” Andy Lipow, president of Lipow Oil Associates LLC in Houston, said in a phone interview.
Canada exported 117,000 barrels of conventional light oil a day to the U.S. East Coast in the third quarter, down from 155,000 barrels a day during that period in 2011, according to data from the National Energy Board.
Light oil from Husky’s White Rose field offshore Newfoundland and Labrador is now approved for use by state-owned refineries in India, Ghosh said.
“We are taking the appropriate steps for making ourselves accessible in that market,” Ghosh said.