México

Guyana

Trinidad
& Tobago




Very usefull links



PW
Bookstore





News links

AP

AFP

Aljazeera

Dow Jones

Oil price

Reuters

Bloomberg

Views and News
from
Norway

 

 

 

Dueling US oil sanctions on Irania and Venezuela give India unexpected leverage

 

 


 

By Meghan Gordon / Platts

WASHINGTON
Petroleumworld 03 15 2019

By asking India this week to cut its Venezuelan crude oil imports, the US may be showing its willingness to ease Iran sanctions enforcement for the world's No. 3 oil consumer.

India needs both Iranian and Venezuelan oil to run its refineries, but Iranian crude has the advantage of being closer, less expensive and potentially more reliable as Venezuela's infrastructure collapses.

The US is using sanctions against Tehran and Caracas to clamp down on both countries' oil exports to exert economic pressure. For major importer India, the two US policies have collided, likely making it impossible for diplomats to talk about one without addressing the other.

India may point to a sharp drop in its Iranian imports, its potential room to cut Venezuelan imports and its increasing reliance on US crude in negotiating for further Iran sanctions relief in May, analysts said.

Iranian shipments to India have dropped to around 270,000 b/d so far in 2019, from a 2018 average of 517,823 b/d, according to data from Platts trade flow software cFlow. The 2018 imports rose from 461,977 b/d in 2017 as the Trump administration geared up to reinstate sanctions along with Iran providing freight discounts to Indian refiners.

Venezuelan shipments to India, however, have remained relatively steady despite the exporter's escalating crisis. India imported 296,356 b/d year to date, compared with 285,255 b/d in 2018 and 334,997 b/d in 2017, according to cFlow data.

PRICES FAVOR IRAN IMPORTS

Increasingly steep Iran Heavy discounts are likely designed to keep Indian refiners interested, and at the possible expense of similar grades. On a delivered basis into West Coast India, Iran Heavy has held a $6.20/b discount to Venezuelan Mesa and a near-$7/b discount to the US medium sour benchmark Mars so far in March, according to S&P Global Platts calculations. This is a far cry from the near-parity sellers of Mars and Mesa enjoyed as recently as June and July.

Venezuelan Mesa is similar in quality to Iran Heavy and Mars, albeit slightly less sour, and offers similar refining economics, in particular for coking on the US Gulf Coast, according to calculations based on Platts prices and Turner, Mason & Co. yield formulas.

India's state-owned refiners are heavily reliant on Iranian oil, while the country's two private refiners, Reliance Industries and Nayara Energy, are significant buyers of Venezuelan crude.

Reliance, which operates two mega refineries at the Jamnagar complex on the west coast of India, has said it will trim crude imports from Venezuela in compliance with US sanctions. The refiner has also halted sales of diluents like naphtha to Venezuela in the past month. State-owned PDVSA uses naphtha to dilute its heavy crude grades to sell overseas.

The situation could be a bit trickier for Nayara, as Russia's Rosneft is its largest owner. Rosneft has continued its operations in Venezuela, including increasing oil product supplies to the Maduro regime. This week, Rosneft rejected US Secretary of State Mike Pompeo's assertion that the company was defying US sanctions by continuing to buy crude from PDVSA.

Another layer of complexity is that private companies often have lower risk tolerance than state-owned companies when weighing sanctions and their threat of getting blocked from the US financial system, said Kevin Book, managing director of ClearView Energy Partners.

"The discussions are probably pretty complicated," he said. "All these things are part of the innate challenge of trying to using economic measures to achieve geostrategic goals. You have to ask businesses to do less well and you have to get them to agree."

US OIL DIPLOMACY

India's imports of US crude have marched steadily higher as Gulf Coast export capacity increases, starting 2019 at a year-to-date average of 133,878 b/d, according to cFlow data, compared with 132,134 b/d in 2018 and 26,342 b/d in 2017, according to the Energy Information Administration. While the US government cannot dictate where private drillers send their crude supplies, the flows have become central to recent diplomatic talks on trade, sanctions and security issues.

Last month, state-owned Indian Oil Corp. struck a deal to buy up to 3 million mt of various US crude grades for delivery over the next fiscal year starting in April. Analysts have said the decision was part of a strategy to broaden its import base, given the uncertainty over Iran sanctions.

India is still buying Iranian crude after US sanctions snapped back in November thanks to a "significant reduction exemption" from the State Department. Terms of the agreement are not public, but the waivers are intended to allow trades to continue as long as the importer reduces volumes every six months.

India's current waiver expires May 4, meaning negotiations over another waiver are at a critical stage as refiners decide whether to continue booking loadings.

Bob McNally, president of Rapidan Energy Group and adviser to former President George W. Bush, does not expect the State Department to make final decisions on the Iran waivers until late April.

"Venezuela is obviously a complication and also argues for holding off until that picture is clearer," he said. "So it's really hard to say with confidence what they'll do. That said, I assume if waiver extensions are granted (perhaps at lower volumes), India will get one."

While India needs no waiver to continue importing Venezuelan oil, the US has threatened additional sanctions that could make it harder for foreign companies to do business with PDVSA. And Pompeo signaled this week that a US request for India to curb its oil business with Venezuela was likely part of the oil sanctions negotiations.

"We're asking the same thing of India as we are of every country: Do not be the economic lifeline for the Maduro regime," Pompeo said Monday, after meeting with Indian Foreign Secretary Vijay Gokhale.

"I certainly won't characterize the conversations; they're private conversations," Pompeo added. "In the same way that India has been incredibly supportive of our efforts on Iran, I'm confident that they too understand the real threat to the Venezuelan people."

 


________________________


We invite you to join us as a sponsor.

Circulated Videos, Articles, Opinions and Reports which carry your name and brand are used to target Entrepreneurs through our site, promoting your organization’s services. The opportunity is to insert in our stories pages short attention-grabbing videos, or to publish your own feature stories.

________________________

Story by Meghan Gordon, with Eklavya Gupte in London and James Bambino in New York from Platts / SPGlobal.

- newsdesk@spglobal.com

spglobal.com
03 14
2019

Hit your target - Advertise with us

PW 300.000 plus request per week

Copyright© 1999-2019 Petroleumworld or respective author or news agency. All rights reserved.

We welcome the use of Petroleumworld™ (PW) stories by anyone provided it mentions Petroleumworld.com as the source.

Other stories you have to get authorization by its authors. Internet web links to http://www.petroleumworld.com are appreciated.

Petroleumworld welcomes your feedback and comments, share your thoughts on this article, your feedback is important to us!

We invite all our readers to share with us
their views and comments about this article.

Write to editor@petroleumworld.com

By using this link, you agree to allow PW
to publish your comments on our letters page.

Any question or suggestions,
please write to: editor@petroleumworld.com

Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels

Twitter: @petroleumworld1


 

TOP

Contact: editor@petroleumworld.com,

Editor & Publisher: Elio Ohep/
Contact Email: editor@petroleumworld.com

CopyRight © 1999-2019, Paul Ohep F. - All Rights Reserved. Legal Information

PW in Top 100 Energy Sites

CopyRight©1999-2019, Petroleumworld   / Elio Ohep - All rights reserved

 

This site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission fromPetroleumworld or the copyright owner of the material.