India welcomes return of Venezuelan oil to market: Puri

Tapping into Latin America nations will help India diversify its import basket, with industries like IOC and HMEL securing 4 million barrels of Venezuelan oil in February

“India, the world’s third largest oil consuming and importing nation, welcomes the return of Venezuelan oil to the market after sanctions on the Latin American nation were eased”, Petroleum Minister Hardeep Singh Puri said.

Without saying if India has resumed purchases from Venezuela, he said some refiners in the country have the capability to process heavy crude oil produced in the Latin American nation.

India last imported Venezuelan crude in 2020.

The U.S. Treasury Department in October partially lifted sanctions on Venezuela’s oil and gas sector. The partially lifted sanctions are through a new six-month license authorizing transactions in the country’s oil and gas sector. The license is to be renewed only if Venezuela can meet commitments leading to fair voting in the next year’s Presidential Election.

“We always buy from Venezuela. We have always bought stuff from Venezuela. It’s when Venezuela came under sanctions that they were not able to supply,” Mr. Puri told reporters.

He said many refineries, including Indian Oil Corporation’s (IOC) Paradip refinery in Odisha is capable of processing the heavy Venezuelan oil into fuels such as petrol and diesel. “We will buy,” he said.

Some Indian refiners have already secured supplies from Venezuela. Tapping the Latin American nation will help India further diversify its import basket which currently is heavily dependent on the Middle East and Russia.

IOC, HPCL-Mittal Energy Ltd (HMEL) and Reliance Industries have reportedly secured 4 million barrels of Venezuelan oil for delivery in February.

Venezuela produces around 8,50,000 barrels per day of crude and is targeting to soon reach 1 million barrels per day. India on the other hand imports 85% of its oil needs.

“We are willing to resume with anyone who is not under sanctions,” Mr. Puri said.

“India consumes more than 5 million barrels of crude oil every day and the demand is only going up. So if Venezuelan oil comes into the market, we welcome it. So do all the others,” he added.

The minister also said some Indian money is locked up in Venezuela, referring to ONGC Videsh Ltd.’s about $413 million unpaid dividends from an oilfield in Venezuela.

India is hoping to get the stuck money back after the sanction easing.

ONGC Videsh Ltd., the overseas investment arm of state-owned Oil and Natural Gas Corporation (ONGC), holds a 40% stake in the San Cristobal oilfield in eastern Venezuela’s Orinoco Heavy Oil belt.

The project is operated jointly by OVL and Petróleos de Venezuela S.A. (PdVSA) – the National oil company of Venezuela.

In November 2016, OVL and PdVSA signed two definitive agreements for the redevelopment of the project. The agreements provided a mechanism to liquidate the outstanding dividends of $537.63 million due to OVL.

OVL agreed to provide loans of up to $60 million for implementing the remediation plan of the project. Under the loan arrangement, it provided a loan of $17.11 million and received part of the outstanding dividend amounting to $124.81 million as of March 31, 2023, the source said, adding that due to sanctions, these agreements had come to a standstill and balance dividend of $412.82 million was pending.

“The easing of sanctions will help get back the stuck dividends”, officials said.

Also, the company is hoping to sell its share of oil from the field, which was 0.61 million tonnes in 2022-23, to whoever offers the best price.