The death of Venezuela’s larger-than-life leader Hugo Chávez will not affect oil flow from the South American nation.
Venezuela has become a favourite crude source for Indian refiners, particularly Reliance Industries Ltd (RIL) and Essar Oil in the private sector.
This is because the ‘heavy’ Venezuelan crude comes at a discount and importing from Iran has become difficult.
The heavy crude comes at a discount of $2-$4 a barrel on Brent.
Almost 11 per cent of India’s crude oil imports of 134 million tonnes during April-December 2012-13 (provisional) came from Venezuela, making it the third largest source for India.
Even as the world waits for the US reaction to Chavez’s death, the Indian oil industry is sure that there will be no major policy change.
Anyway, Nicolas Maduro, the interim President and the ruling party’s candidate in elections to be called within 30 days, is expected to follow the Chavez line.
Reliance buys Venezuelan crude for its two refineries (one for domestic supplies and one export-oriented) in Jamnagar having a combined capacity of 1.25 million barrels a day (60 million tonne annually).
Last October, RIL signed a 15-year supply agreement with Petroleos de Venezuela, SA (PdSVA), the State oil company, for sourcing between 300,000 and 400,000 barrels a day of heavy crude for its two refineries.
Following this agreement, according to a statement issued then by RIL and PdVSA, Venezuela will export 820,000 barrels a day of fuel oil to Asia, after taking into account oil sales to Japan and China.
India, which is turning a refinery hub, has 22 processing plants. While some can process even the most inferior quality crude, others are in the process of upgrading so as to be able to refine all varieties.
As for the investments made in oil and gas exploration and production in Venezuela, industry does not expect many changes.
A consortium of Indian public sector companies — ONGC Videsh Ltd, Oil India, and Indian Oil Corporation — already operates in Venezuela.
While RIL inked a memorandum of understanding in October with Petroleos de Venezuela for development of heavy oil field, recently, the OVL-OIL-IOC consortium announced production from its Carabobo oilfields in small quantity.
The project aims to produce 30,000 barrels a day in the first development phase and 90,000 barrels in the second. The project is ultimately estimated to produce 400,000 barrels a day or 20 million tonne annually.
The project is operated by Petrocarabobo, a joint venture company set up in Venezuela in June 2010 in which OVL has 11 per cent stake and OIL and IOC have 3.5 per cent each.
Spain’s Repsol SA and Petronas of Malaysia have 11 per cent each, while PdVSA is the majority shareholder with 60 per cent interest.
richa.mishra@thehindu.co.in