Thursday, March 07, 2019

India and Venezuelan Oil

India is a lifeline for Nicolás Maduro at the moment because it is buying oil (and Indian oil companies are making a handsome profit). In a previous post, Hari Seshasayee pointed out to me that much of that trade is done by one company, Reliance. The U.S. pressured Reliance heavily to stop trading with Iran. It seems it finally worked at the end of last year. So, he wondered, is Reliance's relationship with Venezuela next? From the Washington Post:
India is one of the countries that continue to recognize the Maduro government. Venezuela’s oil minister visited there last month to persuade the two major oil purchasers — Reliance Industries Ltd., which operates the world’s largest refining complex, and Nayara Energy, partially owned by Russia’s Rosneft oil giant — to buy more. The minister, Manuel Quevedo, told reporters he wanted to see the creation of a non-dollar trading bloc involving China, India and Russia, Reuters reported.
The Trump administration naturally prefers otherwise.
“We’ve asked India and other partners” to join the oil sanctions, “and are working with them to have that arrangement, but everything is on the table in that regard,” the administration official said.
If the administration successfully blocked Reliance off from Iran, it seems logical it will do the same with Venezuela. This becomes a serious issue for Venezuelans, who are deprived more and more as the government's revenue dwindles. The Trump administration is gradually tightening the economic screws. What happens to Venezuelans when there are no buyers?

Update (3/10/19): Elliott Abrams is saying publicly that India is being pressured.

"We say you should not be helping this regime, you should be on the side of the Venezuelan people," Elliott Abrams told Reuters in an interview. 
The Trump administration has given the same message to other governments, Abrams said, and has made a similar argument to foreign banks and private companies doing business with the Maduro government. 
Abrams described the U.S. approach as "arguing, cajoling, urging."
Update (3/19/19): Now Reuters reports that Venezuela has suspended oil exports to India, citing China and Russia as its only partners.


Hari 11:03 AM  

Glad to see this, Greg.

I have a hunch that Reliance may just reduce imports (if not stop it altogether) after the 28 April deadline for US sanctions.

This could really choke the regime off some serious income, because China wouldn´t want to keep buying oil in exchange for dollars, not while they still have upwards of US$70 billion to collect from Caracas.

When Maduro is left with no money to pay the 2000+ generals and the thousands of loyalists, he may just have to cede power.

Greg Weeks 12:11 PM  

Does China still pay dollars or just take the oil as part of debt reduction?

Hari 8:18 AM  

Hi Greg, just saw this message - I´m not fully aware of whether China pays any dollars, but my guess is it would probably be a bit of both, dollar payments plus debt reduction.

On the India front, I spoke to BBC Mundo sometime back and they quoted me on their story, noting that Reliance Industries will likely stop or cut imports from Venezuela:

And guess what? That´s just been announced:
RIL caps Venezuelan oil purchase as US mounts pressure to oust Maduro

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