Bharat Petroleum and Hindustan Petroleum are making a significant shift in where they source their oil. They’re looking to Venezuela as India reduces its purchases of Russian oil. This change reflects the evolving global oil market and India’s energy needs.
The Indian Ministry of External Affairs is open to exploring different crude oil sources, including Venezuela. Indian refiners had previously bought Venezuelan oil until sanctions affected trade in 2020. However, they’ve begun importing it again in 2023-24, though it’s a modest amount—about 1-2% of India’s overall oil imports.
Venezuela has the largest proven oil reserves in the world, but its production has drastically dropped. Current production is around 0.88 million barrels per day, down from 2.5 million in 2010. Factors like sanctions and insufficient investment have led to this decline. Moreover, the Venezuelan crude can be challenging to process. Its high viscosity and acid content require blending with lighter crudes to make it easier to refine.
Industry experts highlight these challenges. Sanjay Khanna, the Chairman of Bharat Petroleum, mentions that while Venezuelan oil could provide a valuable supply, its complex properties necessitate effective blending to make it workable in refineries. Similarly, Amit Priyadarshan, CEO of Caliche, points out that adjusting refinery systems to accommodate this oil takes time and cannot be done instantly.
Reliance Industries, another major player in the Indian refining sector, has indeed secured a shipment of Venezuelan crude, showcasing the interest among Indian companies. The Indian Foreign Ministry has confirmed ongoing ties between public sector oil entities and Venezuela’s state-owned PDVSA.
If India can secure Venezuelan oil at favorable prices, it might cut its fuel import bill by up to $3 billion. However, this benefit depends on domestic refinery capacity and high shipping costs, which could offset potential savings when compared to sourcing oil from regions like the Middle East.
As India navigates its energy landscape, the shift toward Venezuelan crude could significantly alter the country’s oil import dynamics in the coming years.
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