In a strategy to cut dependence on Middle East suppliers for crude oil, India would like to extend better ties with Venezuela
In a strategy to cut dependence on Middle East suppliers for crude oil, India would like to extend better ties with Venezuela. India, which imported 189.43 million tonnes worth $112.74 billion in FY15, is pushing for better deal for crude oil sourcing from the Latin American nation.
Last week foreign ministers from India and Venezuela met in Caracas and reviewed the bilateral agenda and co-operation in the areas of energy, agriculture, pharmaceuticals, technology, and the automotive industry.
Recently, the Indian Minister of state External Affairs Ministry Gen (retd) VK Singh accompanied by a senior official delegation met his counterpart in Caracas, and talked about taking relations between the two countries to higher level and expanded cooperation in many fields including the energy sector. Singh also discussed ways of removing business hurdles with the energy rich Venezuela specifically concerning ONGC Videsh (OVL) operations in that country. The two sides also talked about the visit of Indian Prime Minister Narendra Modi to Venezuela to attend the Non Alignment Movement summit to take place next Feburary.
Venezuela and India have signed a dozen agreements on energy in recent years, including for the development of the Orinoco Belt, oil exploration and production, cooperation in the hydrocarbon sector and development in the gas and petrochemical sectors.
Indian Petroleum minister Dharmendra Pradhan who was in Colombia recently, had said that India imports 20 % of its oil needs from Latin American countries including Venezuela.
The Indian Ministry of External Affairs had been approached by the Ministry of Petroleum to help in extricating OVL and other Indian companies from their troubles in Venezuela. Petroleos de Venezuela, the national oil company of Venezuela, which is reportedly facing a cash crunch is holding back dividends to OVL, the overseas arm of state-run explorer ONGC. The Indian firm has invested in two projects in Venezuela — San Cristobal and Carabobo-1.
Earlier this year, the Venezuelan oil ministry had offered to put in place a mechanism wherein part of the proceeds for payment of crude exported from Venezuela to India could be maintained in Indian rupees, which, in turn, could be used to pay for exports from India to Venezuela.
Venezuela plans to significantly increase crude oil supply to India and is negotiating with Reliance Industries, its major customer, for a joint venture in the OPEC country's energy industry, the head of its national oil company, Petroleos de Venezuela S.A., Eulogio Del Pino, is quoted in a media report.
Top executives said the two Asian giants would purchase half of Venezuela's output when it more than doubles to 6 million bpd by 2019 with the help of its long-term investment plan of $143.7 billion.
"Two of our most important clients are Reliance and Essar. One of the most important refining complexes in the world is Reliance's. We are looking at Asia because the demand for more oil is going to come mainly from Asia. India and China are the most important markets," Del Pino said.
The country produces heavy, viscous oil, which is usually priced lower than lighter grades. Modern refineries that process such grades of crude earn much higher refining margins than other processing plants that require superior grades of oil. Venezuela is also much further away from its key Asian market than West Asian suppliers such as OPEC powerhouse Saudi Arabia, but PDVSA executives say its oil is competitively priced and supplies are reliable.