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As US tightens sanctions, India cuts down oil imports from Venezuela blaming poor infrastructure

Huma Siddiqui

India s import of oil from Venezuela is almost nil since the country s infrastructure is not up to the mark, say sources. The bilateral trade between the two countries is at $ 6 billion and is in the favour of Venezuela due to oil imports by India.

According to sources, the infrastructure of the South American nation is in a depleted state and cannot be used for exporting oil. The political and economic crisis in the country is being watched by New Delhi, which has its embassy in Caracas.

Though the outflow from that country is getting less, still the government is open to the option of starting a barter trade arrangement with Venezuela, as the US sanctions on that country are tightening.

While India had ruled out any using cryptocurrency for the oil payments, a possibility of setting up a bank account in India for payments to be made in Indian currency for the oil imports and the Venezuela side can use that for importing medical supplies and food from India.

There is a political and economic crisis in that country as the opposition leader Juan Guaid , has been attempting to replace President Nicol s Maduro with a transitional government. The opposition leader s claim to legitimacy has been supported by a number of countries, including the US. There are reports which indicate that Russia has warned the US against meddling in that country.

Though India has continued its trading with the South American nation, the US has been pressuring India to stop oil imports from that country.

Sharing her views with Financial Express Online, Prof Aparajita Gangopadhyay, Director, UGC Centre for Latin American Studies, Goa University, The recent US request to India along with other countries not to be the ‘economic lifeline’ for President Maduro reveals that the US is as usual using strong-armed tactics to put Maduro out of power. However, Maduro seems to be hanging in there with the military still supporting him. Venezuela is one of the biggest exporters of crude oil to India.

India has been able to now make payments for this purchase in rupees which suits both India and Venezuela. India has maintained a distance from the crisis in Venezuela, firstly, traditionally India has not commented on the internal affairs of another country. Secondly, India gains much from the large crude purchase from Venezuela and finally, India has good relations with the Maduro government and would not like to comment upon a friendly government that does not have an immediate impact on India, she opines.

According to her, India s siding with the US in the past over Iran did in the long run not help India, especially over the issue of the gas pipeline from Iran and the Chabahar port. Thus, syncing India s policy postures at this point with the United States will not benefit India, given that the general elections have been declared and any rising prices of oil and gas in the immediate future will have an impact on the political fortunes of the present government.

Given that Guaido has not been able to garner the military support, the US call seems premature and India should wait and watch for the crisis to tide over, at least till the general elections are over, Gangopadhyay adds.

Private Indian private companies have their engagement with Venezuela which is India s 4th largest oil supplier. While over, 400,000 bpd continues to be procured by Indian companies, the imports are expected to hit 170 mt in FY19.

India has imported nearly $ 82.03 Billion Crude Oil in 2017 from the world, import from Gulf Cooperation Council (GCC) is $ 27.94 billion and from Latin America and the Caribbean is $ 10.29 Billion in 2017. Till year end Dec-2018, India has imported nearly $ 13 billion which shows nearly 26.4% growth in import from Latin America and Caribbean (LAC) Aggregation. The three major countries in LAC Aggregation which supply Crude oil to India include Venezuela, Mexico and Brazil.

Venezuela Crude oils export to India is recorded $ 5.34 billion till the end of 3rd quarter of 2018 which is 64.53% downfall as compared to 2013 which recorded $ 14.94 billion Crude oil import in India. But in 4th quarter of 2018 the import suddenly jumped and $ 7.92 billion crude oil was imported in India till the end of the year 2018. The clearer picture of import is shown by graphs which includes other Crude Oil partners (Venezuela, Mexico, Brazil) of India in LAC and it is clearly shown the rising import of “Venezuelan Crude Oil” in India.

Before the crisis and the imposition of US sanctions, Venezuela s PDVSA and ONGC had agreed to further invest in the San Cristobal joint venture (JV) over the next few years to increase production. And in an agreement inked in 2017, the first high-pressure water pump, part of a multimillion-dollar deal, was inaugurated.

As has been reported earlier, during her annual press conference in May last year, responding to question external affairs Minister Sushma Swaraj had made it clear that that New Delhi did not make foreign policy under pressure from other countries.

The country has also sent a new envoy to New Delhi Ms Coromoto Godoy, a career diplomat, and an expert in the energy sector.

Long time allies of Venezuela countries like Cuba, Bolivia and Mexico are not supporting the opposition leader Guaid as the country s leader, other countries including Argentina, Brazil, Chile, Colombia, Costa Rica, Paraguay, Peru, Ecuador, Guatemala, have expressed their support.