KOLKATA (miningweekly.com) – Close on the heels of an offer from Venezuelan national oil company, Petreos de Venezuela SA (PDVSA), to repay its debt in kind, Indian government-owned and -operated oil marketing companies (OMCs) are relooking at the operational viability of using Venezuelan crude as feedstock.
Sources say that Indian OMCs, which do not use crude imports from Venezuela for their refineries, are examining the technical possibility of using imported crude, as well as the pricing and volume on offer before any purchase agreements with PDVSA are signed.
It was pointed out that Indian OMCs do not use Venezuelan crude as much of that country’s exports are heavy crude with high sulphur content not compatible with Indian refineries. However, Indian OMCs are examining import possibilities for some of the new generation refineries that have been built in recent years. The Indian Oil Corporation’s new refinery in the eastern Indian port town of Paradip is technically equipped to use heavy crude as feedstock.
The sources say that besides the review of the technical feasibility of using Venezuelan crude, OMCs are also carrying out a due diligence on PDVSA’s ability to maintain volume commitments, considering that Venezuela’s current production is at the lowest point in recent years.
As reported earlier by Mining Weekly Online, Indian oil and gas exploration and production (E&P) major, ONGC Limited had agreed to continue its presence in development of San Cristobel Oilfield project of PVDSA, in response to an offer from PVDSA that it will settle its overdue debt of $449-million through the export of crude to India.
According to media reports here, chief executives of PDVSA and Indian OMCs have exchanged communications on the possibility of Indian government operated refineries using Venezuelan heavy crude, but sources have said that considering the political and economic turmoil in the Latin American nation and the latest appointment of a general as head of PDVSA, a final decision on any fresh crude purchase agreement will be subject to a nod from the Indian government’s Oil and Natural Gas Ministry.