By Nidhi Verma and Marianna Parraga
In a strategic move, two Indian state refiners have recently acquired 2 million barrels of Venezuelan crude from trading giant Vitol for delivery in November. This development marks a significant increase in shipments to what was once Venezuela’s second largest oil market.
Earlier this year, Indian refiners resumed imports of Venezuelan crude after receiving authorization from the U.S. Treasury Department to conduct transactions involving exports of crude and fuel, despite existing sanctions targeting President Nicolas Maduro’s government.
Indian Oil Corp (IOC), the country’s leading refiner, is expected to receive 1.2 million barrels of Venezuelan oil, while Mangalore Refinery and Petrochemicals (MRPL) will be getting 800,000 barrels, according to sources familiar with the situation.
The specific cargo in question consists of Venezuelan Merey 16 crude grade and is currently loaded on the vessel Boston for MRPL, as indicated by Kpler data.
While IOC’s Paradip refinery has the capability to process Venezuelan oil with its 300,000-barrels-per-day capacity, MRPL has historically shown limited interest in heavier grades such as Merey and has rarely engaged in oil purchases from Venezuela.
Additionally, in July, Reliance Industries Ltd of India received approval from the U.S. to resume importing oil from Venezuela. The deal with Reliance includes a swap for heavy naphtha, which is used by PDVSA’s joint ventures to dilute their extra heavy oil and produce exportable grades.
Furthermore, recent data from Kpler reveals that Reliance received a cargo of Venezuelan oil loaded on the vessel Degas last month.
It is worth noting that oil cargoes on the tankers Boston and Degas were reported by PDVSA as sold to intermediaries and not directly to final buyers, according to documents reviewed by Reuters.
There is some ambiguity surrounding whether Vitol possesses a license to sell the crude or is engaged in reselling oil purchased from another entity with the necessary authorization.
According to a shipping source, certain joint venture partners of PDVSA, primarily situated in Europe and holding U.S. licenses for lifting Venezuelan oil, have been observed reselling portions of their cargoes to traders.
Overall, these recent developments in the oil market highlight the complex dynamics of global energy trade and the strategic decisions being made by key players in the industry.
Analysis:
The article discusses how Indian state refiners have purchased Venezuelan crude oil, showcasing the intricate relationships between countries and companies in the global oil market. Despite sanctions and geopolitical tensions, these transactions demonstrate the strategic maneuvers undertaken by key players to secure energy resources. For consumers and investors, this news could impact oil prices, supply chains, and overall market dynamics, underscoring the interconnected nature of the energy sector and its implications for economic stability.