Even as India intensifies efforts to source more crude oil from Brazil, the exercise is not expected to lead to a major uptick in cargoes amidst an intense competition between Middle East and Russia for market share and logistics challenges in transporting the commodity from the South American country.
According to S&P Global Commodity Insights, India has intensified efforts to expand crude oil purchases from Brazil amid escalating Middle East tensions. However, plentiful availability of discounted Russian crude and logistical hurdles could pose challenges in boosting purchases.
Brazilian exports of crude oil to India have been subdued in recent months. So far in 2024, India has imported crude from Brazil during just five months, with imports this year peaking at 41,600 barrels per day (b/d) in April 2024, data from S&P Global’s Commodities at Sea (CAS) showed. In December 2023, Indian imports of Brazilian crude were as high as 143,000 b/d.
Procuring cargoes
While India has increased efforts to expand crude oil purchases from Brazil, some hurdles remain.
“Intense competition from nearby Middle Eastern sour grades and discounted Russian crude presents significant challenges for Brazilian crude in the Indian market,” said Mark Esposito, senior principal research analyst at Commodity Insights.
Notably, Russian sour Urals dominate in the Indian market, comprising 42 per cent of India’s crude imports this year, and constraining opportunities for alternatives. Moreover, logistical hurdles further diminish the appeal of Brazilian crude, he added.
According to CAS data, India’s crude oil imports from Russia stood at 1.7 million b/d over January-September 2024, accounting for more than 40 per cent of the total imports.
Iraq was the second-largest supplier, with 940,000 b/d, while Saudi Arabia supplied 623,000 b/d over the same period, making it the third-largest supplier. Imports from the US stood at 215,000 b/d over January-September, making it the fifth-largest supplier after the UAE, which supplied 423,000 b/d.
Investing in E&P
Recently, Oil Minister Hardeep Singh Puri visited Brazil to discuss how India could expand crude oil purchases from Brazil, as well as look for opportunities to collaborate on offshore deep and ultra-deepwater exploration and production projects.
According to S&P Global Commodity Insights, 2000-2015 could be classified as a period of aggressive internationalisation by upstream companies globally.
Indian companies were also part of this trend and expanded in multiple jurisdictions globally. The period coincided with growing oil prices and a general belief that upstream production growth demanded companies to go out and buy stakes overseas rather than being solely homebound.
“Brazil deepwater was one of the most attractive emerging areas and saw huge participation in bidding by global oil majors, including Indian companies. However, with a few exceptions, Brazil then did not end up being a focus area for Indian companies. This can be attributed to attention being paid elsewhere back then -- Russia and Venezuela,” said Rajeev Lala, director for upstream companies and transactions at Commodity Insights.
However, the tide is turning, and Indian upstream companies are now more open to overseas investments and venturing to newer locations, he said.
Indian companies continue to have Brazil exposure with ONGC’s Campos Basin BC-10 and BPCL’s stake in five offshore blocks, he added.
While entitlement production for Indian companies from Brazil is miniscule—it was about 8,000 b/d of oil equivalent in 2023—new projects coming online starting in 2024 would boost production to about 40,000 b/d by 2028. These include SEAP 1 and Wahoo for BPCL and SEAP 2 for ONGC.
Prime Minister Narendra Modi’s cabinet in July 2022 approved a proposal to invest $1.6 billion to develop an oil block in Brazil in an attempt to procure equity oil overseas.