BPCL Purchases Venezuelan Crude for 1st Time, HMEL Resumes Buying After 2 Years

State-run Bharat Petroleum Corporation Limited (BPCL) has made its first-ever purchase of crude oil from Venezuela, while HPCL Mittal Energy Limited (HMEL) has bought Venezuelan oil for the first time in two years, Reuters reported.

Both refiners have bought one million barrels each of Venezuela's heavy Merey crude oil grade in separate deals facilitated by global trader Vitol. To save on shipping costs, the two cargoes are expected to be co-loaded onto a very large crude carrier. This will bring India's total imports of Venezuelan crude to at least 6 million barrels through April, the report added.

BPCL will split its shipment between two destinations. A part of the oil will be discharged at Kochi port in Kerala for its 310,000-barrel-per-day (bpd) Kochi refinery, and the rest at Sikka port in Gujarat for the company's 156,000-bpd Bina refinery.

HMEL will bring its Venezuelan crude into the country through Mundra port in western Gujarat to supply its 226,000-bpd Bathinda refinery, the report further said.

Notably, Indian refiners have been turning to Venezuelan oil as part of a strategy to diversify their crude supply sources, particularly as they cut back on purchases of Russian oil. This shift has also helped support an interim trade deal between India and the US. HMEL had halted Russian oil imports in October, though the government has not formally announced an end to Russian crude imports.

Refiners, including Reliance Industries, Indian Oil Corporation and Hindustan Petroleum Corporation have previously purchased Venezuelan crude at discounted rates, around $6.5-$7 per barrel below the Dubai benchmark. Traders including Vitol and Trafigura have been marketing Venezuelan oil since January under licenses granted by the US as part of the broader $2-billion oil supply agreement between the two countries.

Point to note: The deal came into place after the Donald Trump administration captured Nicolas Maduro, the former President of Venezuela.

Earlier this month, US had also issued a general licence to Reliance Industries, allowing the company to directly buy oil from Venezuela without violating US sanctions, an earlier Reuters report claimed.

Reliance had reportedly applied for the licence in early January. The company also bought 2 million barrels of Venezuelan oil from trader Vitol this month.

These developments are taking place after Trump removed the 25% additional tariff on India, which was imposed for purchasing Russian oil. Trump had aslo said India would buy more oil from the US and potentially from Venezuela. Furthermore, Trump had mentioned that China would not be blocked from purchasing Venezuelan oil.