Petroleumworld`s
Opinion Forum:
viewpoints on issues in energy, international
politics & civilization.
Saturday's
Lagniappe
India
and Venezuela: a success story
Stephen Ausherman
Charmer, from "India: in the eye of a stranger"
By
Vinod Sreeharsha /"The Hindu"
The
thriving bilateral relationship reflects President Hugo Chavez's
quest to strengthen south-south collaboration.
WITH VENEZUELAN
President Hugo Chavez likely to be re-elected on December 3,
India is seeking to build on its recent friendship with the
South American nation. The thriving relationship is a success
story in President Chavez's quest to strengthen south-south
collaboration.
Venezuela's
imports from India totalled $42 million in the first five months
of this year, and its non-oil exports to India were approximately
$20 million, a marked increase over past years.
Perhaps
more importantly, "Venezuela is key for us in terms of
energy security," said India's outgoing Ambassador to Venezuela,
Deepak Bhojwani, in a recent interview.
Reliance
Limited has imported 10 million barrels of Venezuelan crude
oil this year through October, worth over $500 million. And
in expanding its Jamnagar refinery and in increasing exports
of refined products, Reliance could be a natural partner for
Venezuela, which seeks greater access to Asia-Pacific markets.
And Mr.
Bhojwani adds that, "we are among the few countries that
can process Venezuelan crude oil. This gives us a strategic
advantage." Venezuelan crude is of an inferior quality
to Middle East crude. It is heavier and contains more sulphur,
requiring special processing.
ONGC Videsh
Limited (OVL) is helping Venezuela certify heavy oil reserves
in the Orinoco river belt, which is expected to contain 235
billion barrels of heavy crude. When added to the proven 81
billion barrels of crude oil, Venezuela would become the world's
top crude reserve holding nation. OVL's Junin block is in the
sub-region thought to contain the most reserves, according to
Pietro Pitts, editor of LatinPetroleum magazine.
India also
has a strong presence in the pharmaceutical sector in Venezuela.
Cipla has 120 medications approved to sell in Venezuela, and
expects $15 million in revenue this year. In 2006, half of all
HIV patients in Venezuela received at least one Cipla drug.
Five years ago, 4,000 HIV patients were treated at a cost of
$14,000 per patient a year. This year, 26,000 patients were
treated at a cost of $800 per patient a year.
Solid political
ties
Political
relations between the countries are also solid. Mr. Bhojwani
says India has stood by President Chavez during his seven years
in office while the Opposition in his country and the United
States have repeatedly tried to undermine him.
The India-Venezuela
alliance does face challenges, beyond geographical and language
barriers. India-U.S. relations are at a high point, buoyed by
a strong personal relationship between Prime Minister Manmohan
Singh and President George W. Bush.
President
Chavez and his government generally pay more attention to perceived
U.S. foes such as Iran. They even broke off relations with Latin
American neighbour Peru for negotiating free trade agreements
with the U.S.
Also, Venezuela
and India's economic models are moving in opposite directions.
Last year, 32 oil service production contracts with multinationals
were revamped so that the state is the majority owner. Taxes
and royalties were also increased. Meanwhile, Chevron recently
acquired a five per cent stake in Reliance, demonstrating the
challenge Mr. Chavez faces in maintaining a pure south-south
alliance in today's world. Many countries he is courting are
simultaneously increasing business with the U.S.
Roger Tissot,
a Venezuela expert with PFC Energy, a Washington consultancy,
says that President Chavez's anti-yankee political rhetoric
may give Reliance an edge in doing business with Venezuela but
"that does not mean that Reliance will turn away from making
deals with Americans." Opposition leaders in Venezuela
regularly argue that the country should emulate countries such
as India rather than adopting statist economic policies, fearing
that Asia is leaving Latin America in the dust.
Mr. Bhojwani,
however, calls this criticism unfair. He says India opened up
its markets only when it was prepared to compete globally, and
after decades of protectionism. As an example, he lauds India's
past patent protection for its local pharmaceutical sector,
saying "it needed time to come of age." In contrast,
Venezuela opened up markets prematurely in the past. "Latin
America has been so dependent on multinationals setting up shop
for them that it has not evolved its own home-grown industries,"
says Mr. Bhojwani.
Finding
the right private-public balance in development may be where
India can help Venezuela the most. "The Indian private
sector," concludes Mr. Bhojwani, "is bullish on Latin
America. And I think it is about time."
Vinod
Sreeharsha
is a freelance journalist based in Caracas.
Petroleumworld not necessarily share these views.
