Indian Oil Corp studies renewed Venezuelan crude purchases

NEW DELHI (Reuters) — Indian Oil Corp is considering buying Venezuelan crude for the first time in at least 6 yr, in a move that could help the crisis-struck South American nation settle unpaid bills with another state-owned Indian energy firm.

Photo courtesy of Indian Oil Corp.
Photo courtesy of Indian Oil Corp.

The OPEC-member's economy has collapsed since crude prices plummeted in 2014, forcing it to delay payments for oil services and fuel supplies. Venezuela depends on oil for more than 90% of its export revenues.

Venezuela's national oil company PDVSA has missed debt payments to ONGC Videsh, the foreign investment arm of Indian explorer Oil and Natural Gas Corp, for 6 mos and wants to settle $449 MM dues using existing and new Indian clients.

In a letter reviewed by Reuters, Venezuelan Oil Minister Eulogio del Pino wrote to the chairman of Indian Oil Corp, Sanjiv Singh, last week "to evaluate the possibility of a new Venezuelan crude oil supply and refining agreement" with IOC.

IOC chairman Sanjiv Singh confirmed he had received a letter from Venezuela seeking to sell crude.

"All routes are open for us. We need to look at pricing and quality before taking any decision," Singh told Reuters on Wednesday.

PDVSA did not respond to a request for a comment.

The letter said Venezuela has a supply agreement for more than 360,000 bpd with Indian companies.

It is not clear, however, whether Venezuela could supply more oil to overseas customers. To meet its highly subsidized domestic needs, PDVSA is said to have been siphoning off crude from cash-paying joint ventures with foreign firms.

Venezuela's crude production in October fell below 2 MMbpd, its lowest in almost three decades, according to figures provided to OPEC.

Currently, only private refiners Reliance Industries and Essar Oil currently buy Venezuelan oil.

IOC, which is India's biggest fuel refiner, has not processed Venezuelan oil for years as its crude is heavy and has a high sulfur content. However, IOC's ability to process such cheaper grades has improved after an upgrade of its 300,000-bpd east-coast Paradip refinery last year.

PDVSA and its Indian partners together produce around 40,000 bpd from joint ventures in Venezuela's Orinoco belt.

Reporting by Nidhi Verma in NEW DELHI; Additional Reporting by Alexandra Ulme in CARACAS; Editing by Henning Gloystein and Richard Pullin

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