Crude Oil Import: India's major refineries like Bharat Petroleum, HPCL Mittal Energy Limited, Reliance Industries, and Indian Oil are buying crude from Venezuela, reducing their dependence on Russian imports.

India's crude purchases from Venezuela increase

Crude Oil Import: India's state-owned company Bharat Petroleum Corp (BPCL) and private refiner HPCL Mittal Energy Limited (HMEL) have purchased 1 million barrels of crude oil from Venezuela. This is BPCL's first purchase and HMEL's first in two years. The purchase was made through trader Vitol. Under the oil purchase deal with the company, India's oil imports from Venezuela will reach at least 6 million barrels by April.

This trick was adopted to reduce shipping costs.

To reduce shipping costs, the two companies planned to load heavy crude oil onto a single large vessel. BPCL will split its share between its Kochi refinery in Kerala and its Bina refinery in Gujarat, while HMEL will process its share at its Bathinda refinery in northern India via the Mundra port.

Decreasing dependence on Russia

This purchase of Venezuelan oil comes at a time when Indian refineries are turning to other sources of crude oil supplies to reduce imports from Russia. Similarly, other Indian companies such as Reliance Industries, Indian Oil Corp., and HPCL previously purchased Venezuelan crude oil at prices $6.5-7 below the Dubai crude benchmark.

Venezuelan oil companies Vitol and Trafigura have been handling the sale of Venezuelan oil under US licenses since January, as part of an agreement between Venezuela and the United States. A Reuters report recently revealed that Reliance Industries (RIL) in the US had been granted a license to supply Venezuelan crude oil. This will allow the company to purchase crude oil directly from Venezuela without restrictions. Just in early February, Reliance Industries purchased 2 million barrels of crude from trader Vitol. Overall, Venezuelan oil supplies to India are gradually increasing.  

India is looking for other sources. 

Speaking at the Global Economic Cooperation Summit in Mumbai last Wednesday, Commerce and Industry Minister Piyush Goyal said India wants to diversify its sources of crude oil and coking coal, and the trade deal with the US will help in this effort.

He said, "India is dependent on two or three sources for coking coal, and prices fluctuate. We need American coking coal, which is of high quality."

It should be noted that as part of the trade deal between India and the United States, the United States has removed the 25 percent tariff previously imposed on India as a penalty for purchasing oil from Russia. Furthermore, the remaining 25 percent tariff has also been reduced to 18 percent. India increased its oil purchases from Russia during the conflict in Ukraine. Russia's share of crude oil imports between April and December was 31 percent. The United States wanted India to stop purchasing oil from Russia to pressure Russia into negotiations to end the conflict.