Are Indian Firms Intent on Moving to Venezuelan Oil? The Technical, Commercial, and Political Calculus
Following the announcement of the India-US trade agreement, President Donald Trump unilaterally mentioned that New Delhi had agreed to buy more crude from the United States, potentially reducing purchases from other sources. This has reignited questions about India’s energy relationship with Venezuela, a nation that once supplied up to 13% of India’s crude oil basket but has seen its share dwindle due to US sanctions.
Indian refiners, however, have not been particularly enthused with the prospect of Venezuelan oil flowing into the global market. The reasons are multiple and complex, ranging from the technical challenges of processing Venezuelan crude to the commercial uncertainties created by shifting geopolitical winds.
The Technical Challenges of Venezuelan Crude
S. Bharathan, Director for Refiners at Hindustan Petroleum, has highlighted that Venezuelan crude, other than being bottom-heavy, also has high viscosity and a high acid number. These are not minor technical details; they are fundamental characteristics that determine whether a refinery can process a particular type of crude oil efficiently and safely.
Higher viscosity indicates a potential resistance to flow through pipelines and refinery systems. Amit Priyadarshan, Chief Executive Officer of Caliche, explained that pipes, bends, pressure vessels, outlets, inlets, valves, and chokes in a refinery are designed based on a certain viscosity of crude oil. “Beyond which, it leads to complication in the process,” he stated, adding specifically with respect to viscosity, “in the flow [of crude oil in pipes and systems of a refinery], pressure gets built up.”
A higher acid number presents an even more serious problem. Mr. Priyadarshan explained that a higher acid number would result in corrosion of refinery equipment. Corrosion is not a minor maintenance issue; it is a safety hazard that can lead to leaks, failures, and potentially catastrophic accidents.
Anandh Mathew, the Group COO at Caliche, pointed to another dimension: refineries use catalysts and/or chemicals to process crude into final products such as petrol and diesel. “Refineries procure these based on the type of crude it can process but if there is a different type of crude, it is not like you can go buy it from the market; the catalysts are used in thousands of tonnes each day,” he stated.
According to Mr. Mathew, while recalibrating refineries may not be a particularly uphill task in terms of cost, it cannot be done overnight. The lack of additional storage capacity could also be a constraint. Processing a different type of crude requires planning, testing, and gradual adjustment—not a flip of a switch.
The Processing Workaround
Venezuelan crude, with its challenging characteristics, cannot be processed on its own in most refineries. S. Bharathan noted that it would have to be co-blended with other lighter crude to the extent of 10-15% and then processed. This blending requirement adds complexity and cost to the refining process.
However, not all refineries face the same constraints. Bloomberg reported that Reliance, India’s refining giant, “has taken one Very Large Crude Carrier with a cargo of around 2 million barrels.” Reliance’s Jamnagar refinery complex is specifically designed to handle heavy and extra-heavy crude, giving it a unique capability among Indian refiners.
This capacity is not accidental. Reliance invested heavily in configuring its refineries to process the heaviest, dirtiest crudes—those that others cannot handle—precisely because they often come at a discount. It is a strategic bet on processing complexity as a competitive advantage.
The Historical Context of Venezuelan Imports
India’s relationship with Venezuelan oil has been shaped by US sanctions as much as by commercial considerations. Randhir Jaiswal, official spokesperson at the Ministry of External Affairs, provided the historical context: “We were importing energy or crude oil from Venezuela till 2019-20 and thereafter we had to stop. Again, we started buying oil from Venezuela in 2023-24 which were halted because of re-imposition of sanctions.”
The numbers tell the story of this volatility. The South American nation’s share in India’s crude oil basket hovered between 10-13% until President Trump imposed sanctions during his first term. After New Delhi resumed purchases, Venezuelan crude constituted about 1-2% of India’s overall basket—a fraction of its former share.
This history illustrates the fundamental challenge of relying on Venezuelan oil: it comes with political strings attached. Sanctions can be imposed and lifted with little notice, creating uncertainty that is difficult for refiners to plan around.
The Political Uncertainty
A potential determinant for higher Venezuelan uptake also entails political uncertainty. Mr. Trump’s actions have been condemned at the United Nations Security Council, but condemnation does not change the reality that US sanctions have the power to disrupt global energy markets.
India’s Foreign Ministry has maintained that New Delhi is exploring the commercial merits of any crude supply option, including from Venezuela. This is the language of pragmatic diplomacy—keeping options open while avoiding public commitments that could create complications.
The ministry also pointed to Indian public sector entities in the oil and gas sector having established relationships with the Venezuelan state-owned PDVSA. These relationships, built over years of engagement, provide a foundation that could be reactivated if and when the political environment allows.
The Commercial Calculus
For Indian refiners, the decision to process Venezuelan crude is ultimately a commercial one. Venezuelan oil typically trades at a discount to benchmark crudes because of its challenging characteristics and the political risk associated with its origin. The question is whether that discount is sufficient to offset the additional processing costs and risks.
Different refiners will answer this question differently. Reliance, with its advanced configuration, can handle heavy crude more easily and may find the arithmetic attractive. Other refiners, with less flexible facilities, may find that the discount does not compensate for the complications.
The blending requirement adds another layer to the calculus. Co-blending with lighter crude means that the effective cost of Venezuelan oil depends not only on its own price but also on the price and availability of suitable blending stocks.
The Geopolitical Dimension
Beyond the commercial calculus lies the geopolitical dimension. India is the world’s third-largest oil importer, and its choices about where to source crude have strategic implications. Diversification of supply sources is a key objective, reducing dependence on any single region or supplier.
Venezuela offers genuine diversification. It is far from the Middle East, and its oil moves through different shipping lanes. In a world of increasing geopolitical uncertainty, having alternative sources matters.
But diversification must be weighed against reliability. A supplier that can be cut off by US sanctions at any moment is not a reliable partner, regardless of its geological endowments. This is the paradox of Venezuelan oil: it offers diversification in geography but concentration in political risk.
Conclusion: A Calculated Gamble
Indian firms are not rushing to embrace Venezuelan oil, but neither are they closing the door. The technical challenges are real but manageable, especially for advanced refineries. The commercial calculus depends on prices and discounts that fluctuate. The political uncertainty is the hardest variable to model.
The foreign ministry’s formulation is probably the right one: explore the commercial merits of any crude supply option, including from Venezuela. Keep relationships warm. Monitor sanctions and geopolitical developments. And be ready to move when the arithmetic works.
Venezuelan oil will likely remain a marginal part of India’s crude basket for the foreseeable future—useful as a diversifier and a source of discounted barrels for those who can handle it, but not a cornerstone of energy security. That is a sensible approach to a complicated opportunity.
Q&A: Unpacking Venezuela’s Oil Prospects
Q1: What are the technical challenges of processing Venezuelan crude oil?
Venezuelan crude has high viscosity and a high acid number. High viscosity means resistance to flow through pipelines and refinery systems, building up pressure that equipment may not be designed to handle. High acid number causes corrosion of pipes, pressure vessels, valves, and other refinery components. The crude also contains high metal and nitrogen content. Processing it typically requires co-blending with 10-15% lighter crude and may require different catalysts than those a refinery normally uses.
Q2: Why can’t refineries switch to processing Venezuelan crude overnight?
Refineries are designed and configured for specific types of crude. Pipes, valves, pressure vessels, and other equipment are sized based on expected viscosity. Catalysts, used in thousands of tonnes each day, are procured based on the crude type to be processed. While recalibrating a refinery is not prohibitively expensive, it cannot be done quickly, and lack of additional storage capacity can be a constraint. A sudden switch would risk equipment damage, safety hazards, and inefficient processing.
Q3: What has been the history of India’s Venezuelan oil imports?
Venezuela’s share in India’s crude oil basket hovered between 10-13% until President Trump imposed sanctions during his first term. Imports stopped around 2019-20, resumed briefly in 2023-24, and were halted again due to re-imposition of sanctions. Currently, Venezuelan crude constitutes about 1-2% of India’s overall basket. This history illustrates the volatility and political risk associated with Venezuelan supplies.
Q4: Which Indian refiner is best positioned to process Venezuelan crude?
Reliance’s Jamnagar refinery complex is specifically designed to handle heavy and extra-heavy crude. Bloomberg reported that Reliance has taken one Very Large Crude Carrier with about 2 million barrels of Venezuelan cargo. This capacity to process challenging crudes is a strategic advantage, allowing Reliance to potentially capture discounts that other refiners cannot access.
Q5: How should India approach Venezuelan oil going forward?
India should explore the commercial merits of any crude supply option, including from Venezuela, while maintaining relationships with Venezuelan state-owned PDVSA. Diversification of supply sources is strategically valuable, but reliability must be weighed against political risk. Venezuelan oil will likely remain a marginal part of India’s crude basket—useful as a diversifier and source of discounted barrels for those who can handle it, but not a cornerstone of energy security. A pragmatic, opportunity-driven approach makes sense.
