The Venezuelan presidential elections are scheduled for Sunday (July 28). Incumbent President Nicolás Maduro, who has been in power since 2013, is seeking re-election amidst a backdrop of economic crises and widespread dissatisfaction.
The election in oil-rich Venezuela and the global response to the outcome of the polls are likely to be crucial for India as well.
Here’s how.
Venezuelan oil for India
Venezuela possesses the largest proven oil reserves globally, estimated at around 303 billion barrels.
India is one of the few countries capable of refining Venezuela’s heavy crude oil. Indian companies have long-term contracts to import Venezuelan oil, which helps diversify India’s oil supply sources away from the Middle East and Russia– regions currently facing great uncertainty due to ongoing conflicts.
India had emerged as the top buyer of Venezuelan crude for two consecutive months of December 2023 and January 2024, Indian Express had reported citing shipping fixtures and ship tracking data.
However, India’s import of oil from Venezuela have been on and off, largely due to sanctions imposed by the United States on the country, ostensibly due to Maduro not adhering to democratic principles.
The chance of better oil trade
Under the leadership of Nicolás Maduro and his predecessor Hugo Chávez, the country’s oil production and economy plummeted due to mismanagement and corruption, according to Deutsche-Welle. Maduro’s continued leadership could prolong economic struggles and sanctions.
His tenure has already been marked by hyperinflation, rampant crime, and mass emigration, with over 7 million Venezuelans having left the country since he took office.
The upcoming presidential election is pivotal; opposition candidate Edmundo González Urrutia promises reforms to revive the oil sector and attract international investment. His term could lead to increased production and more reliable oil exports to India.
The election outcome could significantly impact Venezuela’s ability to leverage its oil wealth.
Polls indicate a challenging environment for Maduro, with widespread frustration favouring the opposition. However, concerns about the fairness of the election persist, as Maduro’s government has a history of undermining democratic processes, including disqualifying opposition candidates and using state resources to influence voter behaviour.
The threat of sanctions, again
Sanctions on Venezuela by the United States are likely to be adjusted based on how the upcoming presidential election progresses. The Biden administration has indicated it will “calibrate” its sanctions policy depending on whether the election is conducted fairly.
If President Nicolás Maduro holds a fair vote, the US could ease some punitive measures. However, if Maduro claims victory without providing concrete proof of a legitimate process, this could lead to further sanctions.
In the early months of 2024, Indian companies were able to buy Venezuelan oil as sanctions eased. However, in April, the US re-imposed sanctions on Venezuela’s oil sector in response to President Nicolas Maduro’s failure to meet his election commitments.
Washington, however, said that some firms would be authorised to trade and operate in Venezuela. Reports suggest that Reliance Industries has received approval from the United States to resume importing oil from Venezuela. The company previously accounted for 90 per cent of India’s Venezuelan crude imports.
However, if things go awry, the possibility of sanctions getting even stricter cannot be ruled out.
In a nutshell
The outcome of Venezuela’s presidential election is crucial for India’s energy security. A leadership change could revitalize Venezuela’s oil sector, ensuring a steady supply to India, while Maduro’s re-election under questionable circumstances could prolong economic woes and maintain stringent sanctions, complicating India’s oil imports from the region.
With inputs from agencies
Link to article –
Ballots and barrels: Why the July 28 Venezuelan elections are important for India
