With the United States (US) easing sanctions on Venezuela, India’s crude oil imports from Caracas are set to resume after three years with private sector giant Reliance Industries (RIL) booking three tankers scheduled to load oil from the Latin American country in December and January, as per shipping fixtures shared by trade sources.
India — specifically private sector refiners RIL and Nayara Energy (NEL) — was a regular buyer of Venezuelan crude prior to imposition of US sanctions on Caracas in 2019. Following the sanctions, oil imports from Venezuela stopped. According to data from commodity market analytics firm Kpler, India last imported Venezuelan crude in November 2020. As per India’s official trade data, Venezuela was New Delhi’s fifth-largest supplier of oil in 2019, providing close to 16 million tonnes of crude to Indian refiners.
In October this year, Washington eased sanctions on Venezuela’s oil sector, authorising oil exports without limitation for six months. Venezuela, a member of the Organization of the Petroleum Exporting Countries (OPEC) has the largest proven oil reserves in the world.
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.
Shipping fixtures show that three super tankers, each capable of carrying up to 270,000 tonnes of crude oil, have been chartered by RIL. Two are scheduled to be loaded over the next week, while one is scheduled for early January. In shipping industry parlance, a “fixture” indicates that the charter of a ship has been finalised. An RIL spokesperson did not respond to a request seeking comment on the matter.
Last month, Petroleum Minister Hardeep Singh Puri told reporters that India would be willing to buy Venezuelan oil if it was available at a discount. India is the world’s third-largest consumer of crude oil and depends on imports to meet over 85 per cent 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. Irking many in the West, New Delhi significantly ramped up Russian crude imports as Moscow offered deep discounts after its February 2022 invasion of Ukraine.
Industry watchers believe that with India resuming oil imports from Venezuela, imports by Chinese refiners could be adversely impacted.
“Reliance’s entry into the Venezuelan market is an important development because it further weakens the hold of Chinese buyers over Venezuelan flows. Up until the lifting of sanctions, China was buying the overwhelming majority of cargoes,” Kpler’s lead crude analyst Viktor Katona said. According to him, refiners in the US and Europe are also now lining up for Venezuelan oil.
Katona expects RIL to be the main Indian buyer of Venezuelan crude in the coming months . “Nayara seems to be unlikely to be moving towards Venezuelan oil now, considering how much Russian crude they buy. So, it seems for the time being, Reliance is the ultimate buyer of Venezuelan crude in India,” he said. NEL, which operates a large refinery in Gujarat is a large buyer of discounted Russian oil. Russian oil major Rosneft is part of NEL’s promoter group.
