Indian Refiners Resume Venezuelan Oil Purchases Amid Eased US Sanctions
Indian refiners have reinitiated oil purchases from Venezuela through intermediaries, with Reliance Industries scheduled to hold discussions with executives from the state-owned firm PDVSA next week regarding the possibility of direct sales. This development follows the recent easing of U.S. sanctions on Venezuela, opening avenues for increased trade between the two nations.
The resumption of trade between Venezuela, an OPEC producer, and India, which was once the second-largest destination for Venezuelan oil, comes after Washington temporarily lifted sanctions in October, allowing crude and fuel exports. Most of these transactions occurred through middlemen and traders, primarily to China.
However, Venezuela's oil output has been unpredictable, impacting its export capabilities. India last imported Venezuelan crude in 2020, and renewed access to the country's heavy oil could potentially lower import costs for India, a significant buyer of Russian oil, and decrease its reliance on the Middle East.
Sources indicate that three Indian refiners have secured approximately 4 million barrels of Venezuelan crude for February delivery at prices ranging from USD 7.50 to USD 8 per barrel below dated Brent on a delivered ex-ship basis. Vitol, a trading house, reportedly sold 1.5 million barrels to Indian Oil Corp and 500,000 barrels to HPCL-Mittal Energy (HMEL), a joint venture between Hindustan Petroleum Corp and Mittal Energy Investment.
Reliance Industries had allegedly received an offer for a prompt cargo at USD 16 a barrel below dated Brent, but the status of the deal remains uncertain.
Venezuela, currently producing around 850,000 barrels per day (bpd) with a target of reaching 1 million bpd, is seeking to increase its exports. Reliance, once PDVSA's second-largest crude customer, is also a significant fuel supplier to Venezuela.
A source revealed that the Reliance team has scheduled meetings with PDVSA executives in Caracas, where discussions are expected to cover crude sales to India and fuel imports for Venezuela. However, neither PDVSA, Reliance, Indian Oil Corp, HPCL-Mittal Energy, nor Vitol has provided immediate responses to requests for comments.
PDVSA is also reportedly negotiating crude sales with PetroChina, although no deal has been finalised. While no cargoes have reached India yet, vessels that finished loading in late November are anticipated to depart in December, according to tanker tracking data and shipping schedules.
The ability of buyers to charter tankers willing to load at Venezuelan ports, where delays and quality issues are common, and their willingness to pay upfront, as demanded by PDVSA, will play a crucial role in determining the success of these transactions, according to industry sources. Some buyers have expressed confusion over PDVSA's use of trading houses and intermediaries for oil sales, leading to delays in new purchases, particularly among China's independent refiners.
