India may help ease Venezuela’s oil problem

Venezuela is currently facing a significantly vexing period of time as a result of their reliance on oil to finance their government. The severe decline in oil prices has put some significant strains on the economy and this has been most obviously seen in the declining value of the Venezuelan currency and a cash stressed government.
A new report indicates that their may be some relief on the horizon from an unlikely spot; India.

India may begin to export massive amounts of oil from Venezuela as a result of the attraction of the currency and asset price. India exports a significant amount of products to Venezuela that they are currently in need of, but many India businesses were afraid of doing business with the country for fear of non-payment.

A new payment method explained by David Osio is known as a Vostro system will be used which involves exporters and importers from India offsetting the balances they have receivable and payable to Venezuela through Indian banks to minimize the business risk of the transaction. Ultimately, this will provide some assurance to all that payment can be received and the transactions can work in the long run. More info posted on the site

Overall, Indian businesses entering into this agreement structure may be doing so for fear that their business model may be otherwise undercut by Chinese and other competitors and it makes senses for Indian businesses to try to dominate the Venezuelan market when so many other competitors are afraid to do business in the country.



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