 "Hardeep Singh Puri Petroleum and Natural Gas Minister")
The Ministry of Petroleum has given its informal nod to oil-marketing companies (OMCs) for sourcing crude from Venezuela, which in October became free from certain US sanctions, officials said.
Among public sector OMCs, BPCL is the first one to have placed purchase orders, they said. IOCL and Reliance Industries have bought Venezuelan oil in the past.
The decision has been taken even as more Indian refineries become capable of handling the ultra-heavy Merey-16 grade of crude from the South American country, the officials added.
“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,” Petroleum and Natural Gas Minister Hardeep Singh Puri said at a press briefing on Friday.
He said many refineries, including Indian Oil Corporation's (IOC) Paradip refinery in Odisha, were capable of processing the heavy Venezuelan oil.
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On October 18, the US Treasury Department’s Office of Foreign Assets Control suspended Venezuela-related sanctions applicable to most oil and gas sector operations, which was introduced by the Donald Trump administration. This included the sale of oil and gas, as well as the payment of taxes, royalties, costs, fees, dividends, and profits related to oil.
Before the Covid-19 pandemic, India had regularly imported crude oil from the South American country, which made up 6-7 per cent of the country’s total oil imports. Shipments had reached their peak in 2018-19 when $7.24 billion worth of crude came from the country, which was India’s fifth largest source of crude. In 2020-21, this had reduced to $643 million, followed by no shipments till now.
ONGC has $500 million worth of dividend payments stuck in its Venezuelan assets. The company’s overseas investment arm, ONGC Videsh, has 40 per cent in the San Cristobal field in eastern Venezuela.
Diversifying supply
The government is aiming to diversify India’s sources of oil. They added the rising threat of potential disruptions to the global oil supply, including the increasing chances of escalating tensions around the Israel-Hamas war, has necessitated this further. “The latest focus on Venezuela is part of this broader move,” an official said.
After more than a year of securing major shipments of Russian crude, India is increasingly looking to re-establish supplies from its traditional partners in West Asia.
In October, the share of Russian crude in India’s imports slipped to 33 per cent, down from September’s 35 per cent, and much lower than its historic high of 42 per cent, Reuters reported. This has happened even as the share of Saudi Arabia and Iraq has crept up in recent months. Estimates made by London-based commodity data analytics provider Vortexa, which tracks ship movements to estimate imports, showed imports from Russia rose 5 per cent to 1.68 million barrels per day.
Average levels of discount have increased $8-10 per barrel in recent months, up from around $4 per barrel in July.
