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India’s oil importers left haywire as Venezuela halts supply

2019/03/22 12:00

By Kamlesh Trivedi

 

As Venezuela halted oil export to India from this week, end-users like state-owned oil companies and private sector majors like Reliance Industries Ltd and Rosneft Oil-backed Nayara Energy, will have to start looking for an alternative source of supply.

Azerbaijani oil minister had quoted his counterpart Venezuelan Oil minister and president of state-owned PDVSA on Monday, stating that supply to India has been halted while China and Russia will remain major buyers of Venezuelan crude oil. Late in January, the Unites States government had imposed sanctions against state-owned PDVSA of Venezuela in order to oust the present president of Venezuela Nicolas Maduro. The sanctions were further extended to the state-owned goldmine company in order to ensure that misuse of government funds is stopped.

Although Indian importers had already reduced their dependence on Venezuelan crude over the past two years, import jumped sharply in February this year to around 600,000barrels per day (bpd) of crude, following US sanctions. Indian import of Venezuelan crude averaged at around 400,000bpd collectively.

With the sudden halt of Venezuelan crude oil, India expected to turn to the Middle East-based suppliers. Most of the end-users in India would look for new supply to replace heavy grade Venezuelan crude.

Interestingly, India’s Nayara Energy, backed by Rosneft Oil of Russia, had kept receiving Venezuelan crude through Rosneft of Russia, under its barter arrangement with PDVSA for repayment of loan provided by Rosneft Oil since 2016. Nayara Energy had taken over Vadinar Refinery, the second largest private sector refinery previously owned by Essar Oil of India. 

Indian importers are expected to change their crude import mix in the coming months and import more from the Middle East and North Africa region to replace Venezuelan crude. 

 

 

India : Energy Desk  Kamlesh  +91-98795-50717
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