Amid the relaxation of US sanctions on Venezuela, India’s reliance on Venezuelan crude oil is poised for a revival. Reliance Industries Ltd (RIL), a major private sector player, has taken a significant step by securing three tankers, scheduled for loading in December and January 2024, to procure oil from Venezuela. This move marks the resumption of Indian imports from Venezuela after a hiatus of three years due to US sanctions imposed on Caracas in 2019.
Before the sanctions, private sector refiners like RIL and Nayara Energy (NEL) regularly sourced crude from Venezuela. However, imports ceased following the imposition of sanctions. The recent easing of restrictions by the US has paved the way for India to re-engage in importing Venezuelan oil.
According to trade sources and data from commodity market analytics firm Kpler, India’s last import of Venezuelan crude was recorded in November 2020. Venezuela previously stood as the fifth-largest oil supplier to India, contributing close to 16 million tonnes of crude in 2019, based on official trade data.
In October of the current year, the US eased sanctions on Venezuela’s oil sector, granting authorization for oil exports without limitations for a six-month period. Venezuela, holding the largest proven oil reserves globally and a member of OPEC, has reportedly been extending significant discounts to Chinese independent refiners. However, recent reports indicate a narrowing of these discounts due to the relaxation of sanctions, enticing other global buyers, including India, to consider purchasing Venezuelan oil.
RIL’s chartering of three super tankers, each capable of carrying up to 270,000 tonnes of crude oil, signals a concrete move towards resuming imports. While two tankers are set for loading in the upcoming week, one is scheduled for early January. Despite these developments, an RIL spokesperson remained silent on the matter upon request for comment.
India’s Petroleum Minister, Hardeep Singh Puri, previously expressed India’s openness to procuring Venezuelan oil, especially if offered at a discounted rate. As the world’s third-largest consumer of crude oil, India heavily relies on imports, covering over 85% of its demand.
The geopolitical shift in oil trade dynamics has seen India bolstering its imports of Russian crude, prompting the Indian government to emphasize sourcing oil from wherever it is economically feasible. However, this move has stirred concern in the West.
Analysts foresee the entry of RIL into the Venezuelan oil market as a transformative development, potentially challenging China’s dominance as the primary buyer of Venezuelan oil. Kpler’s lead crude analyst, Viktor Katona, anticipates increased interest from US and European refiners in Venezuelan oil, while highlighting RIL’s pivotal role as the primary Indian buyer in the coming months.
While Nayara Energy remains a significant purchaser of discounted Russian oil, industry experts speculate their reluctance towards Venezuelan imports due to their substantial reliance on Russian crude, backed by the involvement of Russian oil major Rosneft within NEL’s promoter group.