April 20, 2005
Indian state oil firms may import Venezuelan crude

(Reuters) - "Indian state-run refiners are assessing the viability of processing Venezuelan crude oil to diversify supply sources, oil minister Mani Shankar Aiyar told parliament.

'The range of Venezuelan crudes and the possibilities of dilution are under examination,' Aiyar said replying to a question in the upper house of parliament.

India's sole private refiner, Reliance Industries, (RELI.BO) has imported Venezuelan crude in recent years but state-run firms have not processed oil from the world's No. 5 exporter.

Aiyar said state-run Bharat Petroleum Corp Ltd. (BPCL.BO) had approved the use of Venezuelan crude although its sulphur content and higher freight compared to alternatives available from the Middle East were 'complexities' being assessed. 'Venezuelan crude is on the BPCL approved list and would be imported, subject to economic viability,' Aiyar said.

Last month, Venezuelan President Hugo Chávez said in New Delhi that Petróleos de Venezuela and ONGC Videsh, the overseas subsidiary of India's state-run exploration firm, had signed an agreement to jointly explore and produce oil in Venezuela. 'We have already chosen a specific field where we will start drilling. This oil will come to India,' he said during his visit to India.

Aiyar said in March that the Venezuelan company would be offered equity in India's Mangalore Refinery and Petrochemicals Ltd (MRPL.BO), a subsidiary of ONGC (ONGC.BO) to cement energy ties.

A team of ONGC Videsh officials is expected to visit Venezuela this month to discuss prospects of Indian investments in the country and import of crude oil, government officials said.

India imports 70 percent of its crude oil requirement, with more than two-thirds of its purchases coming from the Middle East. The energy hungry country is keen to diversify its sources of crude oil and is aggressively bidding for stakes in oil and gas projects around the globe to secure energy supplies for its rapidly growing economy".