RIL, ONGC may gain from US move on Venezuelan oil

UNDER PRESSURE

- RAGHAVENDRA KAMATH & KISHOR KADAM

INDIAN UPSTREAM PLAYERS such as Reliance Industries (RIL) and ONGC could benefit from the US takeover of Venezuela's oil industry, brokerages and rating firms said on Monday.

President Donald Trump's announcement that US oil companies will invest an unspecified amount to revive the oil infrastructure in the South American nation and increase its oil output, enabling higher crude flows to the US and other markets, is being seen as a positive.

"A US takeover of Venezuela's oil industry could mean the lifting of sanctions on Venezuela crude sales. Reliance, which in the past purchased 20% of its daily crude requirement from state-run oil and gas company PDVSA, could tie up supplies at a $5-8/bbl discount to Brent, aiding GRMs (gross refining margins),"Jefferies said.

Venezuelan crude is heavy, sour, and acidic, and few refineries worldwide are capable of processing it, it said.