Venezuela Rodríguez to Visit India as War Reshapes Oil Trade

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(Bloomberg) — Lea en español

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Venezuela’s acting President Delcy Rodríguez will meet Prime Minister Narendra Modi this week, with energy security expected to dominate discussions as India seeks to diversify crude supplies disrupted by the Iran war.

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Bilateral discussions with Modi “will involve the full spectrum of India-Venezuela relations and explore avenues for further cooperation in the areas of energy, trade, investment, pharmaceuticals and health care,” Ministry of External Affairs spokesperson Randhir Jaiswal said on Tuesday.

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Rodríguez’s June 3-7 visit coincides with India’s renewed effort to broaden its sources of crude after the Iran conflict blocked the Strait of Hormuz, a chokepoint through which almost 40% of the country’s oil supplies flowed before the war. The nation imports about 90% of the crude it consumes.

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India received a parcel of Venezuelan oil in April after a yearlong hiatus as Washington eased sanctions on the OPEC producer. 

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The shipments climbed to about 283,000 barrels a day in April, the highest since March 2020, according to data compiled by Kpler. The data analytics firm estimates June arrivals could increase to about 380,000 barrels a day in a sign of Venezuela’s growing importance in India’s energy mix.

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Reliance Industries Ltd. has been among the largest buyers of Venezuelan crude after it signed a term agreement in 2012 to source as much as 400,000 barrels a day from Petroleos de Venezuela SA. The billionaire Mukesh Ambani-controlled company is among the few Indian refiners capable of processing the South American country’s heavy, sulfur-rich crude. 

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“Venezuela has the potential to become a longer-term supplier to India, particularly as refiners seek cost-competitive alternatives to Middle Eastern grades,” Sumit Ritolia, modeling and refining manager at Kpler said. “However, Venezuelan production remains relatively constrained and is unlikely to materially alter India’s overall import requirements.”

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Exports of Venezuelan crude oil eased in May, marking the first slowdown in growth since the ouster of strongman Nicolas Maduro, as oil prices swung amid volatility triggered by the Iran war. A massive infusion of cash is needed to nurse oil production back to peak levels from 50 years ago, after decades of mismanagement and a dearth of new investments.

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State-run ONGC Videsh Ltd. is seeking to expand its presence in Venezuela. The overseas arm of Oil and Natural Gas Corp. holds stakes in the San Cristobal field and the Carabobo-1 block. ONCG Chairman Arun Kumar Singh said last month the company expects to receive a license under Venezuela’s new regime and is hopeful of increasing production from the assets.

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For Caracas, deeper engagement with one of the world’s fastest-growing oil consumers offers an opportunity to rebuild its economy after years of isolation.

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This will be Rodríguez’s sixth visit to India and her first since becoming acting president after the US captured and ousted Maduro in January. She will be accompanied by several cabinet ministers, including those in charge of foreign affairs, economy and finance, science and technology, communications, and transportation, Jaiswal said.

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—With assistance from Diksha Madhok.

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(Updates with analyst comment, details in seventh, eighth paragraph.)

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