The passing away of Venezuela’s charismatic President, Hugo Chavez, is significant for India for reasons beyond just good old ‘Third-Worldism’ or developing-country bonhomie deriving from the Non-Aligned Movement. Venezuela is today India’s third largest supplier of crude petroleum after Saudi Arabia and Iraq, with a more than 11 per cent share. Moreover, it has happened only in the last few years under Chavez’s rule: Since 2005-06, the country’s crude imports from Venezuela have soared from a mere 6,000 barrels to over 400,000 barrels a day.
Two things explain Venezuela’s sudden emergence as a major crude source for India. The first undoubtedly is linked to Chavez’s own geopolitical priorities, which have been largely supportive of Chinese, Indian and Japanese – as opposed to US or European – investments. This distinct pro-Asian foreign policy tilt extending to oil is unlikely to change if Chavez’s chosen successor, Nicolas Maduro, becomes President in next month’s elections: The chances of that are pretty high. But the second, no less important, factor has to do with private refiners in India discovering the commercial possibilities in processing high-sulphur (‘sour’) crudes from origins such as Venezuela. The fact that these can be imported at a discount to the less waxy, light (‘sweet’) crudes and profitably converted into value-added petro-products in modern, global-scale coastal refineries is a business idea, for which the credit goes to the likes of Reliance Industries. The latter imports a quarter of the crude for its Jamnagar refinery complex from Venezuela.
Venezuela, in that sense, represents a case where there has been a perfect alignment of the foreign policy of both countries with their respective business interests. That, if anything, only shows the way ahead for the conduct of India’s foreign policy – one that seeks to engage more with mineral resource-rich countries on terms beneficial to both sides. And in this, the Government would probably do well to take inputs from its own businessmen, currently operating in various countries independently. It is unlikely that public sector oil companies led by ONGC would have invested in developing Venezuelan fields jointly with that country’s state-owned monopoly PDVSA, but for the private refiners here demonstrating the feasibility of processing heavy crudes even when brought from such a distance. The Government needs to similarly listen more to those sourcing coal, copper or rock phosphate from countries, with whom there is no corresponding level of diplomatic engagement. This applies not only to Indonesia, Chile or Peru, but even to the likes of Jordan, Morocco or Senegal. It helps when such engagement, while grounded in mutual business interest, can also draw on India’s anti-colonial legacy and respect for local traditions.