Listen Live
    An oil pumpjack painted with the colors of the Venezuelan flag is seen in Lagunillas, Venezuela January 29, 2019

    India Unlikely to Toe US Sanctions on Venezuelan Crude Purchase - Research Head

    © REUTERS / Isaac Urrutia
    Opinion
    Get short URL
    Political Crisis in Venezuela (564)
    0 171

    Indian energy specialist Dr Ravi Singh says that Indian private oil firms stand to benefit from the US sanctions on Venezuela, as they would get an opportunity to avail extra Venezuelan crude as more of it becomes available on the market that is redirected from the US.

    New Delhi (Sputnik) — During a meeting between US Secretary of State Michael Pompeo and Indian Foreign Secretary Vijay Gokhale on Monday in Washington, the former emphasised that India should avoid becoming the "economic lifeline" to the "authoritarian" government of Venezuelan President Nicolas Maduro by purchasing oil from the Latin American country.

    Other senior officials of the Trump administration, including National Security Adviser John Bolton, echoed the sentiment. However, India has been consistent in its approach of relying solely on domestic consultations on the question of continuing trade with Venezuela, seemingly siding with Russia and China on the ongoing political crisis in Venezuela.

    Sputnik sought the view of energy specialist Dr Ravi Singh, research head at the Karvy Group, India's leading financial services firm, on the matter.  

    READ MORE: IndianOil Examining Upstream Opportunities in Russia Amid Sanctions — Chairman

    Sputnik: Should India toe the line of the US, which has declared financial sanctions against Venezuela? How is India going to be impacted by the US sanctions on Venezuela?

    Dr Ravi Singh: India is the third-biggest buyer of Venezuelan oil, after the US and China, averaging about 340,000 barrels a day last year. India's private refiners — Reliance Industries Ltd. and Nayara Energy Ltd. (formerly Essar Oil Ltd.) — are the primary buyers. Nayara bought about 70,000 barrels a day of Venezuela's oil in 2018, according to tanker tracking data compiled by Bloomberg. Reliance Industries is the biggest private refiner in India and also the country's top buyer of Venezuelan crude, at about 270,000 barrels a day, or roughly 80 percent of the total.

    The US sanctions may provide Nayara Energy and Reliance with an opportunity to get extra Venezuelan crude as more of it becomes available in the market that is redirected from the US, which will help make up for supply lost. However, it's too early to determine how much more Venezuelan oil may come to India.

    READ MORE: US to Impose ‘Significant’ Sanctions on Venezuela in Coming Days — Abrams

    Sputnik: There have been speculations in India about private firms cutting imports of Venezuelan oil. Can the government dictate to the private firms to continue purchasing from Venezuela?

    Dr Ravi Singh: Both Reliance and Nayara have a big appetite for Venezuelan crude given their heavy crude slate. They cut imports recently due to declining production in Venezuela and Mexico. That's because their advanced refining systems can process the thick Venezuelan grade into high-value fuels such as low-sulphur gasoline and jet fuel. In contrast, state-owned refiners generally won't benefit from more Venezuelan crude as their facilities can't handle the low quality.

    Sputnik: For India, how concerning are the US sanctions on Venezuela, especially in wake of the sanctions against Iran? How can India protect its firms from such sanctions? Will the Indian general elections play any role in the government's decision in this regard?

    Dr Ravi Singh: The US has permitted India and seven other countries to import a limited quantity of Iranian oil under a six-month sanctions waiver, which India hopes will be extended. India is seeking to diversify its oil import sources amid tough US sanctions on Iran and Venezuela and maintains that "commercial considerations and related factors" will determine the value of its trade with any country, including Venezuela which currently holds the rotating chair of OPEC. In its latest report, India's Oil Ministry's Petroleum Planning & Analysis Cell said crude oil imports costs are estimated to increase by 27% to $112 billion in the current fiscal year that will end in March, from a year ago. In the past, whenever there were disturbances in Iraq and Kuwait, India's oil supplies were in very bad shape and it doesn't want to face that kind of situation again.

    The views expressed in this article are solely those of the speaker and do not necessarily reflect the official position of Sputnik.

    Topic:
    Political Crisis in Venezuela (564)

    Related:

    'India Likely to Circumvent US Sanctions on Venezuela' – Professor
    US Wants India to Stop Oil Trade With Venezuela - Special Envoy Abrams
    India Remains One of Largest Importers of Venezuela's Oil - Source
    'Let the Public Decide': India Echoes Russian, Chinese Sentiment on Venezuela
    Tags:
    refinery, crude oil, import, sanctions, India, United States, Venezuela
    Community standardsDiscussion
    Comment via FacebookComment via Sputnik