India Open to Venezuelan Oil Imports Based on Commercial Viability, MEA Confirms

India's Stance on Crude Oil Sourcing

India's Ministry of External Affairs (MEA) has reiterated that the country remains open to sourcing crude oil from Venezuela and other nations, with decisions primarily driven by commercial viability. This clarification was provided by MEA spokesperson Randhir Jaiswal during a press conference. India's energy policy prioritizes ensuring the energy security of its 1.4 billion citizens, a goal achieved through diversifying energy sources based on market conditions and evolving international dynamics.

Historical Engagement and Sanctions Impact

Venezuela has historically been a significant energy partner for India, engaging in both trade and investment. India regularly imported crude oil from Venezuela until 2019-20, when purchases were halted. Imports briefly resumed in 2023-24 but were again discontinued following the re-imposition of international sanctions. At its peak in 2019, Venezuelan oil constituted nearly 7% of India's total crude imports, with trade values reaching $7.2 billion. Indian public sector undertakings (PSUs) have maintained a presence and partnerships with Venezuela's national oil company, PDVSA, since 2008.

Response to US Claims and Commercial Considerations

The MEA's statement comes amidst claims made by former US President Donald Trump, who suggested that India had agreed to cease purchasing Russian oil and instead increase imports from the United States and potentially Venezuela as part of a broader trade agreement. However, India has not publicly confirmed any such commitment regarding Russian oil imports.

Several factors influence the commercial viability of Venezuelan crude for India:

• Geographic Distance: Venezuela is considerably further from India than traditional suppliers like Russia or the Middle East, leading to higher freight costs.
• Crude Characteristics: Venezuelan crude is often heavy and can be more challenging for Indian refineries to process, potentially requiring specific infrastructure adjustments.
• Sanctions Compliance: The assessment of commercial viability must also account for the costs and risks associated with complying with international sanctions.

Despite these challenges, a report by SBI Research indicated that India could potentially save up to $3 billion annually on its crude oil import bill by diversifying some sourcing from Russia to Venezuelan heavy crude, provided a discount of $10-12 per barrel is available to offset logistical and processing costs.

Conclusion

India's approach to crude oil imports remains pragmatic and market-driven, with energy security for its vast population as the paramount concern. While open to resuming imports from Venezuela, any such decision will be based strictly on commercial merits and the prevailing international landscape, including the status of sanctions.