Oilmin asks IndianOil to tap Venezuela for crude
New Delhi   17-Apr-2008
India is looking upon Venezuela as a white knight as its state-owned refiner-marketers grapple with raging oil prices. The oil ministry has asked IndianOil to tap the Andean country for cheaper crude that will yield higher margins and help reduce overall losses accruing from selling motor and kitchen fuels at government-capped prices. At a recent meeting with top IndianOil executives, ministry officials told the company to "explore processing of Venezuelan crude as private sector RIL has got the same at much discounted price". Venezuelan crude is "heavy" and sells" cheaper than the "light" oils — that form the pricing benchmark for global trade—but has lower yield of high-end products. Refiners around the world and in India are preparing their old units for processing heavy crude after blending with lighter variety with the aim of raising refining margins. AH new refineries are being planned for heavy crude. RIL has been buying Venezuelan crude from spot markets and last week worked out a deal for 5 million tonnes a year for its new refinery coming up at Jamnagar. The ministry's directive came after IndianOil director B N Bankapur told officials the company processed 15 types of crude -— mostly low-price heavy oils — in 2007-08 to improve by 30 cents a barrel its margins in the April-December period of 2007. Venezuelan oil's flow to India fits well with the Hugo Chavez government's aim of diversifying its market away from the US. "India is one of the largest markets in the world and the visit of the (Indian oil) minister (Murli Deora) is a very positive sign... we might be sending to India 1 million bpd (barrels per day). What we are doing (with India) is extremely important," Chavez had said. Last week's visit by Deora and ONGC Videsh's partnership deal with Venzuela's national oil firm PDVSA for 40 % Indian stake in San Cristobal field cemented the ties between the two countries.