Venezuela’s oil minister made a surprise appearance at an energy event in India as the embattled OPEC producer seeks closer ties with major crude customers in the face of crippling U.S. sanctions.
Manuel Quevedo, who’s also the head of state producer Petroleos de Venezuela SA, said on Monday his nation wants to sell more crude to India, and that U.S. measures have resulted in a $20 billion loss to the Latin American country’s economy.
His arrival in India coincides with swirling speculation over the future of the Venezuelan oil industry after the U.S., its largest customer, effectively blocked imports of its crude. PDVSA is seeking to retain buyers in other big consuming countries such as China after American refiners halted purchases. The U.S. wants Maduro to cede power to an interim government led by Juan Guaido, a lawmaker who claims he’s the country’s rightful leader.
India is set to emerge as Venezuela’s preferred customer due to the nation’s willingness to pay for crude in cash, unlike China which, has entered into via oil-for-loans agreements, according to Sushant Gupta, director of Asia-Pacific refining at Wood Mackenzie Ltd. The OPEC nation’s output could decline further if it fails to secure enough funds for upstream investments, after production halved from 2016 levels to about 1.3 million barrels a day in January.
Quevedo, who met Indian Oil Minister Dharmendra Pradhan on Monday, said his country’s production is now at 1.57 million barrels per day. Venezuela, which currently holds the OPEC presidency, has a “healthy relationship” with the Asian country, he said at the Petrotech conference near New Delhi, where he originally wasn’t on the list of attendees.
“I have met the Indian oil minister, we are going to meet again,” Quevedo said. “We have a good relationship with India and we want to continue this relationship.”
Venezuela, which is selling in excess of 300,000 barrels a day to India, wants to more than double sales to the South Asian nation, according to Quevedo. Venezuela has many other markets for its oil other than the U.S., he said.
Reliance Industries Ltd., an Indian refiner that operates the world’s biggest processing complex, is taking a parcel of Venezuelan synthetic oil known as Hamaca that was originally scheduled for delivery to a LyondellBasell Industries NV plant in the U.S., according to person with knowledge of situation and shipping reports compiled by Bloomberg. The last time India got the grade was in April 2018.
Venezuela will need to make a lot more such sales to sustain its oil industry. The U.S. sanctions have cut its oil exports to a 10-month low. Last year, the nation loaded one vessel a day for U.S. refiners on average. After the American restrictions were imposed on Jan. 28, only one tanker has loaded over a 10-day period. That has turned oil ships into floating storage facilities.
There are more than 8 million barrels of Venezuelan crude idling all over the Gulf of Mexico in an area that stretches from U.S. coast to the Yucatan Peninsula in Mexico, according to cargo-tracking and market intelligence company Kpler.
Guaido, the head of Venezuela’s National Assembly, is trying to wrest ownership of PDVSA’s Houston-based unit, Citgo Petroleum, away from the current regime. The move forms a key part of his strategy to topple Maduro and install an interim government that would call new elections. Guaido has said he plans to name a new board of directors for the state producer and its U.S. subsidiary.
The U.S. wants to “steal Citgo from Venezuela,” Quevedo said on Monday. “Citgo is a Venezuelan-owned petroleum company. The United States is simply trying to eliminate competitors.”
India’s oil ministry spokesman declined to comment on Quevedo’s statements.
— With assistance by Serene Cheong