How Deal is Cut?

 How deals is cut - Let's not fall in political narrative and see it professionally

Congress eco system is shocked. Their food is snatched from mouth so every one hitting every where

The deal is Win-Win-Win

First of all , it is hard to measure at this time,  the background impact  of USA-EU deal, China’s internal purge of less hawkish Zhang Youshia faction , (vice chair of CCP of military commission and high ranking politburo member) and internal economic data pointing that tariff was inflationary to US economy and pending Supreme Court ruling on who has power on decision on tariff. These are unsettled issues.

Refining of Venezuela’s crude oil: This is most critical reason as i explained yesterday in details

Basically,  there are few refineries built to refine heavy crudes like Russian and Venezuelan.  China has one or two. India has two, Reliance and one by ONGC built by Russian in Assam. This is an estimate.

Chevron has two refineries at east coast that processes limited amount of  heavy crudes.|

 since Biden waived sanctions at the start of Ukraine war, chevron has been already operating in Venezuela in a deal with Maduro with a new name as old Chevron went through reorganization when oil was nationalized by Hugo Chavez.

Chevron has few wells in partnership with Venezuelan government owned oil company to extract and sell oil.

Prior to Maduro catch by USA:

China was buying 600,000 barrels per day from this joint operation. Chevron took another 250,000 to 300,000 per day , leaving remainder for local use, I suppose some were sold to Cuba. These are approximate number but in reality may vary from month to month but total was less than one million barrels per day. When all wells in operation prior to Chavez was nearly three million barrels per day.

At this time, there are other oil wells that are inactive or shutdown after nationalization by Chavez government and or subsequent sanctions placed by USA. 

These wells need millions of dollars of investment to revive and oil companies are reluctant to jump in due to their investment activities elsewhere and other successful operations elsewhere. Supply and demand determines world oil price besides grades. Current price is around $ 60.0 barrel but it has been as high as $ 95.0.

White House invited all American oil companies heads and asked them to open up abandoned oil wells with repairs and investment.

Exxon-Mobile walked out declaring Venezuela is not investable country. They believed anti-American feelings are strong among Chavez followers and they don’t want to sink in more monies because of political risk and other opportunities and prevailing oil price rewards.

This is where India fits in. ONGC has two rigs platforms. In addition to that Guyana has also granted them drilling rights.

United States is trying to win India away from Russia. All along India had complained that oil sanctions were discriminatory because EU buys from India maintaining facade that they do not buy from Russia and support Ukraine 100 percent. 

Turkey and China are also buyers of Russian oil but no tariff actions were taken by USA. USA herself buys the uranium From Russia. India-USA were at loggerheads on this issue.

India’s internal demand as well as from Europe in diesel and avionics fuel have increased and nominal adjustments of Russian purchase is not a big deal from India or Russian viewpoints. 

Furthermore, Trump may remove discount on Venezuelans oil that China received but discussion is open. Besides, China will have to buy In petrodollars. China may pickup any shortfall left out by India from Russia. So, this looks like degree of adjustment. All purchases will have to go through Chevron.

China had a sweet deal with Maduro. China lent its first 8 billion to Maduro and in exchange Venezuela agreed to pay back in discounted oil at $ 18.00 per barrel against world price of 60.0 Per barrel. So, China will be hit in cost and they can  make up this shortfall from Russia by increasing purchases. China is practically thrown out of South America after Panama Supreme Court ruling and the port operation will be taken over by a Dutch shipping company. In return Denmark may grant Christian sound waterways cutting through Greenland in exchange to United States for access to future American naval bases.

All these factors paved the way for arriving at US-India trade deal to move forward.

and remember a fundamental. It is not the Oil well you control, the power lies with who can refine the Oil

All Oil drilled are not of same nature, every Oil need different kind of refinery

Modi ji was aware of refining strength of Reliance and ONGC. He kept quiet because he was aware of the strength, that why his silence killed the Trump ego. 

Who blinked first, This is Art of Geopolitics when Silence is far more deadly then shooting reaction everyday