Venezuelan oil will be the new normal for India as a statement from the Petroleum Ministry spearheaded by Hardeep Singh Puri has confirmed so. India will buy Venezuelan oil, said Petroleum Minister on Friday adding that Indian refineries are capable of processing the heavy oil from the South African country.
Speaking to reporters at an event, Puri stated that New Delhi is willing to resume oil import with any nation that is not under sanction.
This comes after the US in October eased sanctions on Venezuela’s oil sector. The sanctions were imposed to punish Maduro’s government following his 2018 re-election.
“India will buy Venezuelan oil. Many of our refineries including one in Paradip are capable of processing heavy oil from Venezuela. We are willing to resume (oil import) with anyone who is not under sanction sanction,” he said.
“We are in a situation where we are using crude oil 5 million barrels/ per day. And it is increasing every day. If Venezuelan oil comes to market we will welcome it,” he added.
“Many of our refineries, including (IOC’s) Paradip (refinery), are capable of using that heavy Venezuelan oil, and we will buy…We always buy from Venezuela. It’s when Venezuela came under sanctions that they were not able to supply,” he added.
India last imported Venezuelan crude in 2020 when the U.S. imposed secondary sanctions on the nation/ The US imposed harsh sanctions on Venezuela to punish Maduro’s government following his 2018 re-election.
The South American country is producing some 850,000 barrels per day (BPD) of crude with a target of soon reaching 1 million BPD. India, the world’s third-largest oil importer and consumer, has embarked on a strategic journey to reshape its energy landscape.
As a nation heavily reliant on overseas oil, accounting for over 80% of its needs, India aims to curtail its crude import bill and bolster its refining capabilities. This pursuit has led India to explore diverse sources, and one country that has caught its attention is Venezuela.
Venezuela, a historical player in the global oil industry, has been producing oil since 1914. With proven oil reserves of 299,953,000,000 barrels, as of 2016, Venezuela stands as one of the world’s leading holders of oil reserves, representing about 18.2% of the global total.
India, eyeing opportunities to diversify its oil sources and strengthen its refining capabilities, is keenly exploring collaborations for the Venezuelan oil to enter the Indian markets. India is the world’s third-largest consumer of crude oil and depends on imports to meet over 85% of its requirement. Given the volatility in the oil markets over the past nearly two years, the government has maintained that India will buy from wherever it can get cheaper oil.
At least three Indian refiners — Reliance Industries (RIL), Indian Oil Corporation (IOC), and HPCL-Mittal Energy (HMEL) — are understood to have booked Venezuelan oil cargoes, which are expected to land in India over the next couple of months. Bharat Petroleum Corporation (BPCL) is also looking to start imports of oil from the Latin American country.
Venezuela has reportedly been offering steep discounts to Chinese independent refiners, who have been its biggest buyers of oil through the sanctions. However, recent reports suggest that the discounts have narrowed considerably in recent weeks due to the easing of sanctions and other buyers now willing to pick up Venezuelan oil. Caracas appears eager to sell its crude in other major markets and is likely offering discounts to willing buyers.
What were the American Sanctions on the Venezuelan Oil which kept them away from the Indian markets?
Since 2005, the United States has imposed sanctions on Venezuelan individuals and entities that have engaged in criminal, antidemocratic, and/or corrupt actions. The Trump
Administration expanded the scope of US sanctions, moving beyond individually targeted sanctions to include broader financial sanctions, sectoral sanctions, and sanctions on the government of Nicolás Maduro.
Targeted Sanctions Related to Antidemocratic Actions, Human Rights Violations, and Corruption
In response to increasing repression in Venezuela, US Congress enacted the Venezuela Defense of Human Rights and Civil Society Act of 2014. Among its provisions, the law required the President to impose sanctions against those whom the President identified as responsible for significant acts of violence, serious human rights abuses, or antidemocratic actions. Congress extended this act through 2023.
President Obama issued E.O. 13692 for implemention in March 2015, and Treasury issued regulations in July 2015. The E.O. targets (for asset blocking and visa restrictions) those involved in actions or policies undermining democratic processes or institutions; serious human rights abuses; prohibiting, limiting, or penalising freedom of expression or peaceful assembly; and public corruption. It includes any person who is a current or former leader of any entity engaged in any of those activities, as well as current or former government officials.
Additional Financial Sanctions: President Trump imposed additional financial sanctions on Venezuela because of the government’s human rights abuses and antidemocratic actions. In August 2017, President Trump issued E.O. 13808, which prohibited access to U.S. financial markets by the Venezuelan government, including state energy company Petróleos de Venezuela, S.A, with certain exceptions intended to minimise the impact on the Venezuelan people and US interests. In March 2018, President Trump issued E.O.
On October 18, 2023, the Treasury Department :
• issued a six-month general license temporarily authorizing transactions involving the oil and gas sector in Venezuela.
• issued another general license authorizing transactions with Minerven, in part to reduce illicit gold trading.
• amended licenses to remove bans on the secondary trading of certain Venezuelan bonds and PdVSA debt and equity.