Venezuela is now sending its crude oil to India on a large scale. After the new supply deal between Venezuela and America, oil exports from Venezuela have increased and now for the first time, shipments are being sent to India through Very Large Crude Carriers (VLCCs).
According to Reuters report, trading companies and buyers have booked Very Large Crude Carriers (VLCCs) for the first time to import Venezuelan oil. These tankers can carry up to 2 million (2 million) barrels of crude oil at a time. This capacity is almost twice that of Suezmax tankers and almost four times that of Aframax tankers. This will reduce transportation costs and speed up delivery. At least three VLCCs — Nissos Kea, Nissos Kythnos and Arzanah — chartered by Vitol and Trafigura have been given loading slots at PDVSA’s Jos terminal in March. All these ships will leave for India. Apart from this, another super tanker named Olympic Lion is also moving towards Venezuela.
opportunity for india
India was the third-largest buyer of Venezuelan oil in 2019 before US sanctions. After the restrictions the supply almost came to a standstill. Now, after the US has given some concessions under the licensing framework, the business is back on track. American company Chevron has sold Venezuela’s Boscan heavy crude to Reliance Industries for the first time after December 2023. This is the first such major sale after almost six years. Reliance has also purchased another cargo of 2 million barrels from Vitol and is also exploring the possibility of direct purchase from PDVSA. Trading companies have also sold Venezuelan heavy crude oil to Indian Oil Corporation (IOC), Bharat Petroleum (BPCL) and HPCL Mittal Energy. India is taking this step to reduce dependence on Russian oil and diversify its sources.
What will be the price of oil?
Indian refiners are showing interest in Venezuela’s Merey heavy crude available at discounted rates. Although profit margins have come down slightly due to backwardation in the global market, larger cargo can reduce freight costs, which can improve the economics. Earlier this year, most of Venezuela’s oil was being shipped via medium-sized tankers to storage centers in the US or Caribbean. This shift towards the use of VLCC is being considered a significant logistics upgrade.
Venezuela’s oil exports increased
After the relief in sanctions, Venezuela’s oil exports increased to about 8 lakh barrels per day in January, which was about 5 lakh barrels per day in December. However, due to the sharp increase, millions of barrels of oil are lying in storage – which India’s refiners could play a key role in absorbing. Overall, this new phase of oil supply from Venezuela to India through super tankers is emerging as an important part of the changing equations in global energy trade and India’s energy security strategy.
