From the Viewsroom

Toeing the US line

Richa Mishra | Updated on March 12, 2019 Published on March 12, 2019

Does India stand to gain by curbing oil imports from Venezuela?

A senior Petroleum and Natural Gas Ministry official, at a global event, is reported to have said that India is pushing for reducing crude oil imports from Venezuela in line with the US sanctions on PDVSA, a Venezuelan state-owned company.

The statement came as a surprise to oil industry trackers and also raised questions on whether India needs to work out an independent energy policy? The government has been maintaining that policy decisions are based on commercial requirements.

So should New Delhi be influenced by Washington’s unilateral sanctions? And can the government dictate commercial policy decisions of private sector companies?

A parallel can easily be drawn on how India dealt with Iran following the American sanctions on doing business with the Gulf nation. Can India turn the PDVSA restrictions into a bargaining tool for negotiating with the US for doing business with Iran — a traditional business partner?

In fact, analysts feel that if New Delhi wants to show its support there are other ways of doing it. According to Vandana Hari, Founder and CEO of Vanda Insights, US sanctions against Venezuela’s PDVSA are unilateral and Washington has not threatened sanctions against international companies doing business with Venezuela. A more critical question, she says, is about Indian companies’ presence in the Venezuelan upstream sector.

India, which is heavily dependent on crude oil imports, needs to have a clear policy that protects its supply from geo-political turmoil. This would also mean having a policy that is based on the country’s own bilateral relations.

The need is also to give more power to public sector oil companies, who are dominant players in India’s energy space, to formulate their own policies in their best commercial interest. This policy should be in accordance with the extant guidelines of the Central Vigilance Commission.

When it comes to crude import decisions of private refiners, the government can perhaps request but not dictate, says Hari. But then again, one wonders if this could be a bargaining chip to persuade the US to renew India’s current waivers to continue importing Iranian crude.

Published on March 12, 2019
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