|
|
|
Rupee trade option to keep Venezuelan oil flowing
|
|
|
|
Top Stories |
|
|
|
|
SME Times News Bureau | 14 Mar, 2019
The government may initiate a barter trade arrangement with Venezuela to
prevent disruption of oil supplies from the Latin American country
following threats from the United States to extend Iran like sanctions
there as well.
Diplomatic sources said that a mechanism akin to
Rupee-Rial trade between India and Iran is being looked at where
Venezuela will be paid in rupee in the branch of an Indian bank for its
oil, while this money can be used by Venezuela to import food and other
essential items from India.
Venezuela is the fourth-largest oil
supplier to India after Saudi Arabia, Iraq and Iran. It accounted for
about 11 per cent of India's oil supplies in 2017-18, supplying close to
18 million tonne (MT). India imported 155 MT of oil in 2017-18. The
imports are expected to hit over 170 MT in FY19.
"India and
Venezuela discussed the mechanism to continue the oil trade at last
month's Petrotech meeting in Delhi. This is being further discussed at
official level so that a payment mechanism around Indian rupee is
operationalised," said an official source privy to the development.
The
total trade between India and Venezuela currently stands at about $6
billion and is heavily tilted in favour of the Latin American country
due to oil imports by India. The main items of Venezuelan imports from
India include pharmaceutical products, machinery, organic chemicals,
cotton, iron and steel and vehicle parts.
Diplomatic sources
quoted earlier said that oil-for-medicine or oil-for-food deal has been a
non-starter, as in the past Venezuela has favoured bilateral deals with
Indian pharmaceutical companies rather than locking supplies of
medicines with oil exports.
This experience has not been a happy
one for Indian companies such as Novartis and Dr Reddy's, who also faced
payment issues earlier there. But now with Venezuela itself facing
severe shortages, India sees an opportunity to re-start talks on barter
trade arrangements.
It is worth noting that India's trade deficit
with Iran narrowed when the latter was on sanctions, as Iran felt
compelled to use up its rupee reserves. India's experience in
rupee-rouble trade with the erstwhile Soviet Union has also been good.
The
US is likely to disapprove of such efforts, but India also does not
want to lose yet another oil-rich nation from its import list that could
have a bearing on its energy security.
The US is seeking to cut
off Venezuela's oil revenue as part of its efforts to build pressure on
President Nicolas Maduro to step down. The US has recognised opposition
leader Juan Guaido as the head of state. The sanctions mean that anyone
using the US banking channels or having big presence in the US and also
continuing to deal with Venezuela will also face restrictions.
In
view of this, Indian buyers such as Reliance Industries and Nayara
Energy (formerly Essar Oil) have already expressed their concern. These
company are big importers of oil from Venezuela. In fact, Reliance
Industries accounted for 80 per cent of Venezuelan oil imports to India
in 2018 at 2,70,000 barrels a day. But the company sources said it has
decided to cap oil purchases from Venezuela in view of the sanctions.
Alternate
payment mechanism in rupee and barter trade arrangement is expected to
keep oil flowing from the Latin American country even with hardening of
US sanctions.
|
|
|
|
|
|
|
|
|
|
|
|
|
Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
|
66.20
|
64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
|
|
Daily Poll |
|
|
PM Modi's recent US visit to redefine India-US bilateral relations |
|
|
|
|
|
Commented Stories |
|
|
|
|
|
|
|
|