Buckling under US pressure, Modi govt warns Indian oil companies against importing Venezuelan crude

The Narendra Modi government has asked India’s oil companies to stop the purchase of Venezuelan crude, amid US’ sanctions on the administration of President Nicolas Maduro.

“The Indian government is warning companies to halt purchases of Venezuelan oil or face undisclosed consequences,” MM Kutty, the Secretary at the Ministry of Petroleum and Natural Gas told energy industry executives at a conference in Houston, US, on Monday, as per a news updated by Bloomberg. The remarks came at the conference titled CERAWeek, which brands itself as a premier energy event.

The significant comments by the Indian government official come in the wake of several warnings by US officials to countries involved in purchase of Venezuelan crude.

During a meeting between India’s foreign secretary Vijay Gokhale and US Secretary of State Mike Pompeo on Monday, Pompeo urged India to not be the “economic lifeline” for Maduro.

“We are asking the same thing of India as we are of every country: Do not be the economic lifeline for the Maduro regime. So we talked about (Venezuela). I certainly won't characterise the conversations; they're private conversations," said Pompeo. Earlier, a warning had come from US’ National Security Advisor John Bolton, who had said that the US “wont sit idly” as other countries continued to engage in trade with Caracas.

While the South American country’s overall crude exports are falling drastically since the latest round of US sanctions kicked in on January 28, its oil exports to India have seen a rise. Venezuela’s overall oil exports have fallen from 1.4 million barrels a day before the sanctions to 1.15 billion barrels a day after January 28.

However, in the case of India, the crude imports from Venezuela have almost doubled after the US sanctions kicked in, as per data put together by Washington-based Institute of International Finance (IIF).

Speaking to National Herald from Washington, IIF’s deputy chief economist Sergei Lanau said that if India decided to go America’s way and cut down on Venezuela’s crude imports, that will have disastrous consequences for the beleaguered government of Nicolas Maduro.

“Revenue from Venezuela’s crude oil exports has already come down from around $80 billion in 2013 to $30 billion last year,” Lanau noted.

He refused to speculate on the possible repercussions for India if it continued to import Venezuelan crude.

However, getting shut out of the US financial system could be a possible consequence.

Venezuela’s oil minister Manuel Quevedo was in India last month, as he tried to shore up support among Indian refiners to increase their imports of Venezuelan crude to recoup losses suffered due to cutting down of oil imports in the US.

“We are selling more than 300,000 bpd to Indian buyers,” Quevedo had said, adding that Caracas wanted to double its exports to India.

Government data shows that Venezuela was India’s fourth largest crude exporter, supplying 17.5 million tonnes of crude, as of 2017.

Reliance Industries Limited, Nayara Energy and Oil and Natural Gas Corporation (ONGC) are some of Indian players involved in trading of Venezuelan crude. A list of current Indian companies importing crude from Venezuela has been sought from the Embassy of Venezuela, New Delhi.

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