Diplomatist Magazine Diplomatist March 2019 | Page 51

SPOTLIGHT
INDIA-VENEZUELA RELATIONS
A CASE STUDY IN OIL DIPLOMACY
BY HARI SESHASAYEE*
I
n light of U.S. sanctions imposed on PDVSA on 28
January 2019, Venezuelan oil exports to the United States
have dried up, leaving a shortfall of up to 500,000 bpd that
Venezuela exported to the United States before sanctions were
imposed. In this scenario, the two private Indian oil companies
that currently buy Venezuelan oil, RIL and Nayara Energy,
have gradually increased their imports from Venezuela.
For India, at least for the short term, Venezuela is only
a supplier of oil. Besides oil, New Delhi does not see any
other strategic imperative in engaging Caracas—it would
be ill-advised for India to take any political policy position
vis-à-vis Venezuela, especially regarding the ongoing political
crises in the country.
For Venezuela, and more specifi cally the current chavista
regime, India is not an ideological ally and is unlikely to
go out of its way to support Caracas in matters of state and
foreign policy. India will remain an invaluable commercial
partner for Caracas, as a buyer of oil and supplier of priceless
foreign currency in a rapidly plummeting economy.
In some ways, it is advantageous for both countries that
the relationship is not burdened by ideology. This is unlike
Venezuela’s allies China and Russia, who remain close to
the current administration. But oil will continue to fl ow from
Venezuela to India in roughly similar measures regardless of
the party in power in either country.
Oil, or more specifi cally, crude petroleum oil, is the
cornerstone of India-Venezuela ties. The export of crude
petroleum oil from Venezuela accounted for 98.54 percent
of all India-Venezuela trade in 2017–18.
Reliance Industries Limited (RIL) is the most important
player in India-Venezuela trade, accounting for an
overwhelming majority of Venezuelan crude oil imported
by India. This is made possible due to the highly complex
nature of RIL’s twin refi neries, which can process practically
any grade of crude oil into gasoline or diesel. In 2012, RIL’s
Executive Director PMS Prasad fl ew to Caracas to sign a
long-term heavy crude oil supply contract with PDVSA. The
terms: PDVSA will supply between 300,000 to 400,000 bpd
of crude oil to RIL for 15 years. The RIL 2012–13 annual
report notes that “the agreement provides RIL with security
of supply and allows it to optimize around that supply while
providing PDVSA a material Asian end user market.”24
Besides RIL, only one other Indian company, Essar
Oil, currently buys Venezuelan crude oil, albeit in smaller
Extraordinary and Plenipotentiary Diplomatist • Vol 7 • Issue 3 • March 2019, Noida • 51