India-US-Venezuela Oil Deal: The crucial trade deal between India and the US sparked a debate over New Delhi's energy policy as US President Donald Trump claimed that India would now buy oil from America and Venezuela instead of Russia. However, Moscow said India is free to buy oil from anyone, while India responded that the country's interests are paramount.
In fact, after the attack on Venezuela in the first week of this year, the US now has indirect control over the country. American companies are investing in the oil sector. The question now is, if India stops buying oil from Russia, will Venezuela be able to meet India's needs?
Can Venezuela Replace Russia As Oil Supplier?
According to experts, Venezuela cannot replace Russia in meeting India's energy needs. Venezuela can only be partially helpful because only Reliance Industries' Jamnagar refinery in India can continuously refine Venezuelan crude oil in large quantities. Refining Venezuelan oil in the country's other refineries is still risky because the quality of Venezuelan oil is very poor. This is the reason why state-owned Petróleos de Venezuela has been offering discounts of USD 13 to USD 15 per barrel on a delivery basis.
How Much Crude Oil Does India Buy?
India imports more than 5 million barrels of crude oil daily, while Venezuela's current total oil production is only 800,000 barrels per day. It is true that Venezuela has the world's largest oil reserves, but production is very low compared to India's needs. Venezuela also sells its oil to the US, China, and Cuba. Therefore, meeting India's demand without increasing production is practically impossible. The real problem is the lack of infrastructure. Venezuela does not currently have a strong enough infrastructure to rapidly increase production. This would require significant investment and several years.
Venezuela To Take Five Years To Produce 3 To 4 Million Barrels Of Oil Per Day
Experts believe it will take Venezuela at least five years to reach a production level of 3 to 4 million barrels of oil per day. On the other hand, one year of Trump's term has already passed, and three years remain.
Venezuelan Oil Is Similar To Russian Oil, Claims US Media
US media outlet CNN quoted Rob Thummel, Senior Portfolio Manager at Tortoise Capital, as saying that Venezuelan crude oil is similar in quality to Russian oil, and Indian refineries are already capable of processing it. However, Venezuela's oil infrastructure is in a dilapidated state. According to experts, returning to the production level of more than 3 million barrels per day that existed before the socialist government came to power in 1999 would require at least a decade and billions of dollars in investment.
(With Jagran.com inputs)