“It is always good when more supplies come to market,” said petroleum minister Hardeep Singh Puri. “We will buy from wherever we can get cheaper oil.”
India’s crude imports fell 6.9% in September to 17.42 million mt (4.3 million b/d), according to the latest provisional data from the country’s Petroleum Planning and Analysis Cell. Analysts said the decline in crude imports for the fourth straight month was because of higher crude prices and lower domestic demand from seasonal factors like monsoons.
But analysts expect India’s crude imports to pick up in the quarter to December, riding on the seasonal festive demand in Asia’s third largest economy.
“We will be able to navigate in the journey ahead as we have been able to navigate in the past,” Puri said. “We are keeping a close watch on the on-going geo-political tensions in the Middle East.”
Diversification spree
Oil ministry officials said India diversified its sources to import crude from as many as 39 nations and hoped the return of OPEC member Venezuela would add to the country’s list of steady suppliers.
“We are open to sourcing crude from any country including Venezuela at a reasonable price,” a senior official of the oil ministry said.
Last month, the US Department of the Treasury eased oil, trade, and financial sanctions on Venezuela for a six-month period, which could be renewed if the Maduro government follows through on its political and electoral commitments.
This means that US oil companies will be allowed to begin to explore and advance investments in Venezuela. Of more immediate relevance is that US oil refiners will now be able to buy oil directly from state-run PDVSA. This may lead to lesser Venezuelan crude coming to Asia.
According to S&P Global, decades of underinvestment in oil-related infrastructure will limit PDVSA’s ability to raise capacity above 850,000 b/d within the next 6-12 months, with current production sitting around 750,000 b/d.
During the pre-sanctions period from 2017 to 2019, India imported about 300,000 b/d of Venezuelan crude, with private refiners like Reliance Industries and Nayara Energy the key buyers, S&P Global data showed.
“As India’s domestic demand recovers and refiners look to cater to the festive season, India’s oi imports will also bounce back. Indian refiners are used to Venezuelan oil and they will start looking at it more seriously,” said one oil industry official.
But Indian government officials have made it clear that in the future, any crude imports from Venezuela would be guided by the country’s policy related to energy security. At this point, the prospect of plentiful flows of Venezuelan crude to India appears remote, although things could change over the medium to longer term.
Other options
Even if Venezuelan crude does not flow to Asia in a big way, Asian refiners were not unduly worried about supplies, as countries like India and China continue to snap up plentiful volumes from Russia and other non-Middle Eastern suppliers.
Russian crude flows reached 1.8 million b/d over January-September, accounting for 38% of India’s total oil imports and rising from 11.2% during the same period in 2022, according to S&P Global.
India’s oil demand rose 5.5% month on month to 19.26 million mt (4.9 million b/d) in October, the PPAC data showed, reflecting the first rise in three months on improved economic activity as monsoon rains waned. October oil demand was up 3.7% year on year.
Analysts said the month-on-month rise in oil demand was on account of higher mobility and robust industrial and construction activity, as the winter season started with the end of the summer rain season.
In 2022, India consumed some 4.9 million b/d of oil products and liquids. This consumption is forecast to rise to 5.2 million b/d in 2023 and 5.3 million b/d in 2024, according to S&P Global.
